Re: bundling is inherently unfair to consumers

["Lewis A. Mettler" <lmettler@lamlaw.com>]

Norm,

Norm wrote:
> 
> On Tue, 14 Dec 1999 12:15:51 -0500 (EST), Lewis A. Mettler wrote:
> 
> >>      AH..HA!!!  So now you're *FINALLY* getting it (albeit probably
> >> without realizing it yourself).  You've been arguing about how *ALL* or
> >> *ANY* bundling is harmful to consumers (and have even gone as far as to
> >> claim it's against some unwritten 'consumer right'), but now you've
> >> qualified it by stating that it's different when done by a
> >> monopolist...with *THIS* I can agree.
> >
> >It is different.  When a monopolist does it, it is also illegal.
> 
>      Then quit plugging in an argument about a monopolist when the
> issue is a product not tied to a monopoly.
> 
> >
> >But, fairness and harm is determined from the perspective of the
> >consumer.
> >
> >There is in fact a lot of bundling which is not illegal.  But, that does
> >not make it fair nor harmless.
> >
> >If you want to know if bundling is fair, break down the consumers into
> >appropriate classes and ask them.
> >
> >Offer them a discount or sell separate products separately and see what
> >they do.
> >
> >Microsoft Word is offered separately simply because a lot of customers
> >only want and need the word processor and do not want to be forced to
> >buy the suite, right?
> >
> >You really should ask those customers who buy just Word whether they
> >would consider it unfair or harmful if only the Pro Suite with Access
> >were available for purchase.
> >
> >Go ahead. Ask them.  They will most likely tell you they will switch to
> >WordPerfect. Do you see a comparison here with the bubblegum deal?
> >
> >
> >> This distinction (a monopolist)
> >> is the defining issue, but to use it as an example for non-monopolistic
> >> products is to engage in what we use to call 'pseudo-deductive
> >> reasoning'.
> >
> >No. Not at all.
> >
> >I have always separated what was illegal and what was only unfair or
> >harmful.
> 
>      WRONG!!!!   You're constantly using the IE/windoze marriage as an
> example when trying to support your argument for products that don't
> enjoy monopoly status.  They're *NOT* interchangeable.

Let me say this one more time.

Legality, fairness and harm do not coincide.

What Microsoft has done is illegal because they are a monopoly.

Bundling is unfair and harmful even if not illegal.  Do you understand
the difference?

I always distinguish the difference between illegality and unfair or
harmful.

Fairness to the consumer is not codified in any law as such.

Fairness between competitors is in some States.  In California the "Fair
Practices Act" does apply to all companies whether they are a monopoly
or not.  And, yes, the California AG has charged Microsoft with the
violation of that law as well.

The IE/Windows bundling illustrates illegality, unfairness and harm. 
The judge has found all of that to be the case.  The converse is not
true.

Just because you find that other companies do not have monopolies does
not mean that their bundling is fair nor not harmful.

Bundling is inherently unfair and harmful to consumers despite the fact
that it might be legal.

> 
> >
> >A legal act is not necessarily fair nor harmless.  To be illegal, a
> >monopoly must be proven.  To be unfair or harmful, you only need to ask
> >consumers what they think.
> >
> >For this reason, I have separated out consumers into certain classes.
> >In that way, you can easily understand how and why certain classes would
> >find the act of bundling unfair or harmful regardless of whether it is
> >illegal or not.
> >
> >Have you even bothered to ask a consumer without need for a modem if
> >they want to buy browser technology?  If not, did you bother asking if
> >they want a word processor or not?  Or, do you just force them to buy a
> >particular brand of one regardless of their needs?  If so, I hope you do
> >not hold out yourself as a consultant.  Consultants always ask the
> >customer what they need as their first step. Too many people on this
> >list suggest that the consumers should be flatly ignored and told what
> >they must buy.
> 
>      That's nonsense, I've yet to read a post on this list in which the
> poster advocated that consumers be ignored and forced to purchase a
> particular 'bundle'.  Your claim is a 'red herring'.

Forcing consumers to buy any product they do not need is not a red
herring.  It is direct financial harm.


> 
> >
> >If you are still confused, read the findings of facts.  Illegal bundling
> >acts almost always are unfair and harmful to consumers.  However, that
> >does not mean that legal acts are not harmful or unfair.  Remember your
> >logic class?  The converse of a true statement is not always true?
> 
>      Then maybe you should read it again.  Just two paragraphs above
> you claim that those who don't agree with your position must then
> support the opposite extreme...it ain't so.

You are more than willing to illustrate how my conclusions are not true.

Simply concluding the opposite is meaningless.

If those who support bundling are not just promoting the products they
want to bundled, then explain why they are doing that.  Explain why they
are forcing the sale of products upon those consumers who know for a
fact they do not want them.

> 
>      IMNSHO the main reason you're not getting any converts is because
> your position is all the way to one extreme.  In 'real life' there are
> very few 'absolutes', and your claim that *ANY* and *ALL* bundling is
> harmful to *ALL* consumers just doesn't hold true.

Sorry.  But, until someone provides an illustration of how bundling is
not harmful or unfair, I and everyone must conclude that my illustration
(including Bill Gates) prove that they are harmful and unfair.

Yes.  Saying "all" and "always" does leave the door open. But, to date,
no one walked though.

I have also said that which product is bundled does not matter either. 
I have even suggested bundling a case of bubblegum and jaw breakers. 
Others have suggested bundling a load of manure.  They are all the
same.  They all harm consumers.  And, they all are unfair.

Would Judge Jackson make the same findings if Microsoft bundled a case
of beer and Budweiser was forced to give away their product?  The answer
is "yes".

The product you bundle is not important.  Reread the bubblegum deal. 
You can also find the jawbreaker deal on my web site.  The product does
not matter.

If the first product is not a monopoly product you will be very unlikely
to buy the bubblegum as others have suggested.  That is true.  You can
only force the sale of a truly unwanted product if you have a monopoly
product to bundle it with.  However, fairness and harm are caused by all
bundles (unless you can illustrate one that does not harm consumers).

With monopoly products the bundled product does not matter.  Microsoft
customers MUST by the bubblegum.  With non-monopoly bundles the seller
soon finds out that sales are lost and the bundling is dropped (assuming
they can).

If you compete with a monopolist that bundles you may be forced to do
likewise.  Hint: This is why BeOS, Linux and OS/2 are blocked from
entering the OS marketplace.

See the examination question for more material on barriers to entry and
how bundling affects that concept.

-- 
Lewis A. Mettler, Esq.(Attorney and Software Developer)
lmettler@LAMLaw.com
http://www.lamlaw.com/ (detailed review of the Microsoft antitrust
trial)