Re: Bundling and operating systems

[Eric Lee Green <elgreen@iname.com>]

On Sun, 19 Dec 1999, Lewis A. Mettler wrote:
> Eric Lee Green wrote:
> > On Sat, 18 Dec 1999, you wrote:
> > > Sorry.  Harm is measured by the individual consumer not averaged.
> > 
> > I think this is the essential difference between law and economics. Economics
> > is concerned with the overall impact of actions. Law is concerned with the
> > effects of actions upon one specific person.
> 
> Incorrect.  See the findings of facts in regard to consumer harm.

I think there is no question that consumer harm has resulted from Microsoft's
actions. However, I suggest that the appropriate focus is upon Microsoft's
business practices, not Microsoft's product line. Microsoft's business
practices constitute anti-competitive abuse of monopoly power. You're beating a
dead horse.

You say that bundling,  in itself, reduces consumer choice. Untrue. For
example, I work for Enhanced Software Technologies Inc., the makers of BRU, the
leading backup solution for Linux. All Linux systems come bundled with not one,
but TWO backup programs -- 'tar' and 'cpio'. Yet McMillan licenses our product
to sell as part of their Linux package. Corel licenses our product to sell as
part of their Linux package. Caldera licenses our product to sell as part of
their Linux package. Probably other people do, too.  When I was working for
LHS, we sold a copy of BRU with every tape drive we sold. Why are people doing
this, when there is already a FREE backup package bundled with Linux? 

The answer is clear -- we provide functionality beyond the functionality
offered by the bundled package. This is similar to why Compaq wanted to bundle
Netscape as the default browser for their computers, despite the availability
of a free Internet Explorer: Netscape offered functionality that IE did not.
Thus, despite the fact that IE was free, this did not in itself result in
consumer harm. Rather, Microsoft's OEM licensing terms are what resulted in
consumer harm -- Microsoft forced Compaq to configure their machines in ways
that the customers did not want., and did not allow Compaq to meet the desires
of their customers.

Any critique of Microsoft needs to focus upon their business practices, not
their product line. As long as Microsoft is allowed to leverage their monopoly
position in order to prohibit OEM's from meeting customer's needs,  and
as long as Microsoft is allowed to leverage their monopoly position to
set prices that are higher than what a free market would set, consumer harm is
resulting. Bundling has absolutely nothing to do with any of this, except
insofar as Microsoft's licensing terms prohibit substitution of another
(customer-demanded) product in place of the bundled product.  

Again: We are beating a dead horse when we talk about bundling. It is
Microsoft's business practices insofar as pricing and OEM relationships, not
their software, that is the real cause of consumer harm. 

-- 
Eric Lee Green   e_l_green@hotmail.com
  http://members.tripod.com/e_l_green/