The Market? Hah!

Why don't we just let the market decide?

That's been Microsoft's battle cry over the past few months, as the lawsuits and legal threats against the company have piled ever higher.

And it's a reasonable question, in a week when Sun Microsystems has added new charges in its suit against Microsoft and both the US Justice Department and a dozen states are brandishing new antitrust lawsuits against the software giant.

How about we let Microsoft and its competitors slug it out in the marketplace? So far, the Internet battle alone has given us free Web browsers, better Java implementations and faster time-to-market for software. Why not let competition take its course and just enjoy the benefits of the free market?

The short answer is that "the free market" isn't very good at enforcing the law. And utterly unfettered, free-wheeling competition is downright lousy at it.

Face it - when someone steals your laptop, you don't "leave it to the market to decide" whether you should ever get it back. When somebody hot-wires your car, you don't let the market determine whether you'll ever see it again.

Customers love a bargain, which is why low-priced stolen goods will always be popular. That's also why it will always take more than market forces to deter thieves. When your car or laptop is ripped off, you don't consult an economist - you call a cop.

In the IT world, nobody knows that better than Microsoft, the most active pursuer of software piracy in the industry. "The market" isn't big on enforcing copyright laws, so Microsoft goes after both vendors and user companies that make illegal copies of Microsoft products, and it pursues them with a vengeance.

Microsoft jealously guards its trademarks, too - sending lawyers after vendors who misuse Microsoft's "Windows compatible" logo or other intellectual property. Let the market decide? Don't be ridiculous. Sending in the cops and lawyers is exactly the right thing to do because - to put it bluntly - the market doesn't care.

I love letting the market do its thing. I enjoy watching a good knock-down, drag-out marketplace fight that forces vendors to beef up their offerings, reach for new approaches and rethink customers' needs.

But when laws are broken - whether they're copyright, trademark or antitrust laws - it's time for the law to step in. And that's true whether the scene of the crime is some clone shop in San Jose, California, a corporate office full of pirated spreadsheet software in New York or a big software company in Redmond, Washington.

Has Microsoft broken the law? Yes, says one judge; probably, says another. Taken together, those two legal opinions guarantee Microsoft will spend years in court - with a strong chance that judges and Justice Department attorneys will be looking over its corporate shoulder for a long time.

Ironically, there's an easy way out. If Gates decides that, starting now, Microsoft will demolish its rivals solely by selling the best products in the world, Microsoft's legal problems would vanish overnight.

That means no more tying products, threatening vendors or breaching contracts. Using clean, unassailably legal competition, Microsoft probably would still win almost every marketplace battle. Customers would have more and better choices. Best of all, government lawyers would have to find something else to do with their time.

But that had better happen soon or it won't be the market that decides anything. It'll be the jury.

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Frank Hayes

PC World
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