Random commentary and senseless acts of blogging.
The first Republican president once said, "While the people retain their virtue and their vigilance, no administration by any extreme of wickedness or folly can seriously injure the government in the short space of four years." If Mr. Lincoln could see what's happened in these last three-and-a-half years, he might hedge a little on that statement.
Prisoners of Azkaban
Sunday, November 10, 2002
For years now, the Japanese economy has been mired in an unending slump because, among other things, major banks have many billions of dollars in bad loans that they decline to write off and the government is afraid to force a write off, fearing that it would expose some major banks as actually insolvent. American media and economists have tut-tutted at geat length on this state of affairs, explaining that treatment of some companies as too big to fail shows the weakness of Japanese business and the superiority of American business practices.
With the recent Microsoft settlement, it is plain that American megacompanies are not only too big to fail, they're also too big to be expected to obey the law. The trial found that Microsoft violated the law; the settlement agrees. It's just that the Justice Department feels Microsoft shouldn't actually be punished for illegal activities, what with all those fat checks to the RNC.
Aside from harmful effects for consumers, the probable harmful effects for the economy as a whole are substantial. IT and particularly IT entrepreneurialism drove a great deal of the economic growth of the 90's boom both by generating new jobs directly and increasing productivity in other sectors of the economy. The harmful effects of the bubble in overpriced stocks of companies that had no viable plan for becoming profitable shouldn't make us forget that.
Microsoft now has an unprecedented ability to block IT innovation, and no real inducement not to. Indeed, it now quite effectively blocks innovation without doing a thing. A venture financer who agrees to fund a new software application, however valuable, would have to be regarded as defective in either competence or sanity. Either the market will embrace the new app and Microsoft will copy it, or the market will ignore the new product. Either way, there's no money in bringing it to market, so nobody is going to invest in doing so.
There are still numerous niches for enterprise systems, mostly designed around the needs of specific industries. But Microsoft has largely closed off any new applications niche, and has been successful in blocking or slowing innovative new computing devices that don't require a desktop running Windows.
Other companies will also be encouraged to violate antitrust and probably other laws, since they now know that all they have to do even if caught in illegal activity is draw out litigation until a friendly administration takes office and drops enforcement actions. But Microsoft's ability to dominate its industry and squash innovative products is based not only on its effective monopoly but also the structure and economics of the software industry, and is probably unique.