Tuesday, September 18, 2007

Punishing success: It's not un-European

Some people see lots of other people buying stuff in large quantities and they think, "Hmm, people must want that." The Europeans see a company churning out products that people have been queuing up to buy and ask, "How can we put a stop to that?"

Microsoft is getting another spanking for the crime of producing products that people want, this time in the European courts who fantasise that "consumers are suffering at the hands of Microsoft." The Europeans are pig ignorant buffoons who are ensuring that consumers will suffer, just as they always do with every antitrust decision.

"Once again," as Onkar Ghate pointed out last time Microsoft was given the finger by the courts,
Microsoft is being attacked for its success: in reality it has no monopoly power just brilliant management.... Microsoft is today's prime example of what Ayn Rand called 'America's Persecuted Minority.' Like an increasing number of big businesses, Microsoft is being punished for being successful, for making products that people want to purchase.
Microsoft has no monopoly power? It's true. Microsoft has no political power to force to consumers to buy its products, only the economic power to offer them products worth buying. In fact, as George Reisman explains, it is Microsoft's competitors who are after the monopoly:

What underlies such an incredible outcome is the utterly mistaken belief that overwhelming competitive success, to the point that one man or one company dominates an entire industry, constitutes monopoly. This, of course, is the kind of success that Gates and Microsoft have enjoyed.

The fact is that such an outcome of free competition is not monopoly. But it is monopoly when those capable of bringing about such an outcome are forcibly excluded from an industry, or any part of an industry. The accompanying forcible reservation of an industry or part of an industry even to a mass of less capable producers is the real monopoly, as much as if the industry had been forcibly reserved to the possession of one man or one company. The essential element in monopoly is forcible exclusion and forcible reservation, not the number of producers.

So the Europeans fantasise that "consumers are suffering at the hands of Microsoft." Mark Hubbard looks at the European decision and confesses to "a fantasy" of his own, a "daydream, that Bill Gates will hold a press conference and announce the demise of Microsoft forthwith: no new products, no support for existing ones, they are simply going to disappear: and then see what the world looks like."

It's an interesting thought, isn't it. Who would suffer then, I wonder. Who needs whom more?

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22 Comments:

Anonymous Falafulu Fisi said...

From the other thread on What would 'Party X' do about the environment? - PART 3: Small Consents, it quoted that:

When the productive have to ask permission from the unproductive in order to produce, then you may know that your culture is doomed.

This is true and that is exactly what is happening to this fucking stupid ruling from those unproductive EU judges, lawyers & courts.

9/18/2007 12:45:00 pm  
Blogger Richard said...

When all is said and done, though, Microsoft products are still crap.

9/18/2007 01:17:00 pm  
Blogger Matt B said...

Richard, no question that Microsoft products could be better, but at the end of the day Microsoft still convinces people to fork out money for the software when there are plenty of free alternatives on the market for their flagship Office and Windows products. They can only do this by offering a product that is good enough, and not just in the technical details but also in marketing and reputation and support. The only reason Microsoft makes money is because they convince nearly all users to pick their product off the shelf and not the other box.

9/18/2007 01:26:00 pm  
Blogger Berend de Boer said...

pc, certain behaviour of Microsoft can hardly be said to be "normal".

For example, pc makers couldn't sell any other product than Microsoft with their pc's else they would have to pay a lot more for their ordinary license.

Please tell me how such behaviour benefits anyway, and where is the invisible hand of the market in this?

Of course John Doe could sell pc's with something else than Windooze, but in a volume market this behaviour of Microsoft basically made any kind of competition impossible.

We can argue though that this led to the success of Open Source, because Microsoft's behaviour simply killed any other commercial OS that was not tied to hardware.

But all in all, let's not give the impression that Microsoft's success came because of hard work or smart management. They were successful because of extremely dirty tactics.

9/18/2007 06:19:00 pm  
Blogger Duncan Bayne said...

richard,

I have to ask: what software (OS, browser) did you use to post that comment? :-)

(Stands at the ready, perfectly prepared for the answer 'Ubuntu 7 & Firefox) ...

9/18/2007 10:41:00 pm  
Anonymous LGM said...

Berend,

While you might not like Microsoft the fact is that what causes their success is that they give the consumer what he is prepared to voluntarily pay for. Think hard about it before you net fire up your computer.

Microsoft are under no obligation whatsoever to provide welfare for competitors. Nor are they obliged to make it easy for those guys to compete. There is no moral reason why M/soft should allow anyone operating under a license with them integrate a competitor's product with theirs.

M/soft are completely within their rights to require a computer manufacturer install no competitor software should that manufacturer wish to have an agreement/license with M/soft. There is no initiation of force here as the computer manufacturer is able to decline M/soft's terms and conditions should they consider them unacceptible. Then they could go install some other software in thir products. On the other hand the manufacturer is also able to accept the M/soft terms and conditions and sign on the dotted line should they decide to VOLUNTARILY. many do. That's all as it should be.

Now, you may be yet another anti-M/soft hysteric, but if you want to object to that company's existence you'll need to do better than such lame banality as M/soft does "dirty tactics."

LGM

BTW is "perfect competition" the objective for an economy and business, or is it the maintenance of civil society by the protection of Individual Rights as absolute? The choice is the irrationality of the Chicago School of Economics or the logical, moral approach of the Austrian School. Make your choice!

9/19/2007 04:12:00 am  
Blogger Matt B said...

Berend, that couldn't be a less convincing argument. What rubbish you write.

9/19/2007 08:33:00 am  
Blogger Richard said...

I have to ask: what software (OS, browser) did you use to post that comment? :-)

XP, Firefox.

what causes their success is that they give the consumer what he is prepared to voluntarily pay for

When you say that Microsoft give the consumer what he is prepared to voluntarily pay for, you are merely saying that Microsoft is a legal, private business. Being a legal, private business is not the cause of Microsoft's success.

you may be yet another anti-M/soft hysteric, but if you want to object to that company's existence you'll need to do better than such lame banality as M/soft does "dirty tactics"

Is Berend objecting to Microsoft's existence? I think not. He's just ascribing their success to dirty tactics. Which is as good an alternative explanation as any, since it's just not plausible to ascribe their success to the quality of their software.

9/19/2007 01:16:00 pm  
Blogger Berend de Boer said...

LGM: but if you want to object to that company's existence you'll need to do better than such lame banality as M/soft does "dirty tactics."

I made no reference to existence.

Not all behaviour that is possible, is virtuous. That's a concept that's beyond objectivists, I know.

9/19/2007 01:20:00 pm  
Anonymous lgm said...

Berend

That's your position? M/soft is bad and Objectivists are naughty because they don't agree with the likes of religious nutters such as yourself. Hopeless. Utterly useless.

How about you avoid playing word games and try understanding the substantive issue- after all it was you who raised it...

M/soft could not be sucessful if people didn't voluntarily buy its product. They do and so it is. Simple.

In the absence of committing IOF, making things tough for competitors is not immoral.

"Dirty tactics"? That's a nice catch-all term. Dirty according to whom exactly? You? Your mates? Why? By what principle?

LGM

9/19/2007 05:27:00 pm  
Anonymous lgm said...

Richard

Stop playing word games.

M/soft succeeds because people voluntarily buy its product. If they did not buy it the company would fold very quickly.

LGM

9/19/2007 05:30:00 pm  
Blogger Richard said...

I am not playing word games. You said

what causes their success is that they give the consumer what he is prepared to voluntarily pay for

which is FALSE, because "they give the consumer what he is prepared to voluntarily pay for" is true of any business, including the ones which, in comparison to Microsoft, are failures.

The cause of Microsoft's success must be something more than the mere fact that they're in business.

9/19/2007 08:13:00 pm  
Anonymous lgm said...

Richard

Yup, you're into word games.

The substantive point is that M/soft do not force consumers to purchase their product. The consumers are purchasing it voluntarily. They want it. It's a simple as that. Now should the consumers decide that they do not want M/soft products and stop voluntarily buying, then M/soft would be out of business very quickly indeed.

M/soft (unlike the European governments) do not have squads of enforcers forcing people to hand over money or forcing them to act involuntarily according to arbitrary regulation. As far as dealing with M/soft is concerned an individual has a choice to purchase or walk away. That is certainly not the case in relation to governments and their various organs.

Now what you (and Berend) have been trying to evade is the issue of people (millions of them) voluntarily purchasing product you do not like from a company you do not approve of (or whose management you do not like or whose ability to compete in the market you do not like- whatever). The facts remain. People ARE acting voluntarily and purchasing what M/soft supplies. That is because M/soft supplies what they want. Can you get that? M/soft gives them what they want and want enough to pay good money for.

--

Regarding your word games. How about these two examples from you:-

1/. "When you say that Microsoft give the consumer what he is prepared to voluntarily pay for, you are merely saying that Microsoft is a legal, private business."

No. That's false. Your assertion is based on faulty logic. Hence, your conclusion does not stand.

When I write that M/soft give the consumer what he is prepared to voluntarily pay for I am actually pointing out that Microsoft give the consumer what he is prepared to voluntarily pay for. Fancy that! I did not write or indicate that Microsoft is a legal, private business. I didn't mention that aspect at all. Your comment is irrelevant to the substantive point I raised.

2/. "You said

'what causes their success is that they give the consumer what he is prepared to voluntarily pay for'

which is FALSE, because "they give the consumer what he is prepared to voluntarily pay for" is true of any business,..."

False, yet true of any. And all at the same time. Wow! What a contradiction!

Logic is defined as the non-contradictory identification of reality. Either a statement is false or it is true. This is a very important concept to grasp. Think on it some.

Repeating the guts of the issue yet again, people are paying M/soft money voluntarily for its product. Many millions of people are doing this. M/soft is very, very good at ensuring it presents them with what they will voluntarily buy, because, in the end, it has no coercive power to force them to part company with their cash and buy its product.

So, quit playing the word games and start with some logical, clear thinking.


LGM

9/20/2007 07:00:00 am  
Blogger Berend de Boer said...

LGM: The substantive point is that M/soft do not force consumers to purchase their product.

LGM, if you actually read a comment before firing, you could see that I made the point that people were forced to buy M$ products, because you couldn't buy a PC without them.

There was nothing voluntary about that. You had to buy Windows, you paid for it, even if you didn't use it.

Ten years ago you couldn't buy a laptop to run x86 software without paying for Windooze. Now you can, my last Dell laptop didn't come with Windooze and was cheaper than one with.

But I'm afraid it wasn't the market that made that option available.

9/20/2007 08:53:00 am  
Anonymous LGM said...

Berend

Now you are merely being dishonest.

Face it man! Microsoft is not some Great Satan of immorality and corercive force! Consumers are not forced to buy M/soft product. A consumer can walk into a shop and refuse to purchase a computer with M/soft product installed. He can request a virgin machine or he can ask for one with some other software (not M/soft) should he so wish. No-one is forcing him to purchase what he does not voluntarily decide to purchase.

Now the vendor has a choice in this as well. He can say to the consumer, "Well OK then. Here is a machine without M/soft software installed. The price is $xyz." Alternatively he could choose to say, "No, mate. This is what I sell. [points at product display] It comes with M/soft installed. I am not offerring you something other than that which I have decided to sell. The price is $abc. Take it or leave it." That is HIS choice.

The consumer can decide to buy or move on at this point. No coercive force involved at all. no-one is forced to do anything.

I am reminded of the day I purchased my first Lamborghini in London years ago. When I went into the showroom there it was. It came without air-conditioning and it sat upon Pirelli P7 tyres (the rear ones were monsters, 345/35 VR15, how times have changed!). The dealer informed me that air-con was not an option and that he was not prepared to fit any other tyres to the car. Only Pirelli was to be fitted to LP400S. That car ONLY came with the P7, nothing else. Take it or leave it. The choice to purchase or not was mine. The car came as the manufatcurer and dealer offered and that was that. My option was to buy it or move on and get something else. No initation of force involved.

Now the situation is the same with any product really. The consumer gets to choose whether to buy or not. That does not mean that the consumer sets the price or the ultimate specification. Setting those are choices the manufacturer or vendor makes. Of course, he tries very hard to ensure that what he chooses is what the consumers are likely to voluntarily pay cash for.

M/soft is being attacked for competing and being successful at it. But in the end, it is people voluntarily deciding what they want to buy that decides its success of otherwise. As Von Mises indiciated, in Capitalism the customer is the king (and can be a cruel & fickle one at that).

In conclusion, your assertion that consumers were forced to purchase M/soft product is false and deceptive.

LGM

9/20/2007 10:07:00 am  
Blogger Richard said...

what causes their success is that they give the consumer what he is prepared to voluntarily pay for

So you're saying that to succeed in business I should give the consumer what he is prepared to voluntarily pay for? Got any other useful tips?

9/20/2007 11:07:00 am  
Blogger Berend de Boer said...

lgm, can you read? Please read the following carefullly:

Ten years ago you could not buy an x86 laptop without paying for windooze. You had to pay for it. Even if you didn't use it. Even if you didn't want it.

Read that again.

And then tell me what choice did I have if I wanted to run Linux?

And please don't get into a rant. I made no reference to M$ being the great Satan, you sound as a guy with issues. Just read my post carefully.

9/20/2007 01:36:00 pm  
Blogger PC said...

BEREND, your point was "that people were forced to buy M$ products, because you couldn't buy a PC without them."

This is, if I may say so, a rather unique view of force.

Where's the gun? Who's forcing whom?

If you don't want a computer the way it's offered, then where's the physical compulsion to buy it?

The only people getting the gun out here are the courts, insisting that a producer offer their product in the way THEY want, instead of in the form the producer wants.

There's your force.

That's Reisman's point.

Fact is that the reason for Microsoft's success is that very many people DO want to buy their computer configured in the manner you and the courts object to, and not one is forced to buy -- for them, and for you, it's a voluntary choice.

9/20/2007 01:52:00 pm  
Anonymous LGM said...

Berend

You are the one who needs to learn how to comprehend what is presented. Time for you to get an education.

According to you ten years ago one couldn't purchase a x86 laptop with having M/soft windows installed. Assuming that is correct for the moment, the question is, so what? No one forced you to buy one.

Twenty years ago I couldn't buy a Lamborghini without it being fitted with Pirelli tyres. Interestingly enough all of them came with a V-12 installed as well. One couldn't have an LP400S with a V-8 or a V-6 as the vendor would not offer a Lamborghini of that specification (same situation exists today, you can have a V-12 in the Murcilago or a V-10 in the Gallardo but not a V-8 and not a V-6). So what? No one forced me to buy.

In both cases the decsion to buy is voluntarily made by the customer. Buy or walk away.

Voluntarily made decisions. No IOF.

The major point for you to get your hollow head around is that you DO NOT have a right to force a vendor into offering goods built to a specification that you set. You can politely ask him but always remember, determination of whether to accept your terms/specifcations or to deny them is a matter for the vendor to decide. Not you. The goods are HIS property until they are actually sold. To force him to do what you want is immoral.

The same principle applies to M/soft's competitors. They have no moral right to determine how M/soft is to offer its product for sale. Nor do they have the right to force a computer manufacturer or retailer to configure their products in a particular manner or to a particular specification (with or without M/soft software for instance). That is a matter for those organisations to properly decide for themselves. They may decide to or they may decide not to. They may sign an agreement to so do or they may not. It's THEIR decision to make.

The same principle applies to the government and its courts. They have no moral right to set the specification of what M/soft sells or how it is sold.

Now surely even the likes of you can understand that. But hey, if you are still having trouble, look above. PC has summed it up very succintly indeed. Re-read his contribution and go think on it some.

LGM

9/20/2007 06:02:00 pm  
Anonymous lgm said...

Richard

Yes. That's the general idea of being an honest and successful businessman- offering to the consumer what he will voluntarily pay you his money to purchase. Sounds simple, but it can be very difficult to achieve on a consistent on-going basis. It's even more difficult to do it to a big scale. It's especially tough to do it profitably.

You ask whether I have any other tips. Well, yes and no. I certainly have the business experience and have enjoyed success. It's certainly a demanding but most enjoyable activity.

Am I prepared to share free advice with you? No. You wouldn't know what to do with the information. The best way to gain the knowledge is to get in there and learn the hard way. Learn by doing. That's the ticket.

LGM

9/20/2007 06:12:00 pm  
Blogger Berend de Boer said...

pc, thanks for actually reading my comments.

But you guys argued a different point: that people voluntarily forked over money for M$ products.

I made the case that this was not true. They might have given M$ money, but it wasn't voluntarily, they had to buy it as part of a package deal.

That's quite different from freely giving M$ money, as I have done as well (for example I had a $5000 MSDN subscription for many years).

If you need X, and you need to by X+Y, just because Y forces X to do so (through their discount mechanism), can only with objectivist glasses be seen as voluntarily for all parties.

And about the gun: I don't believe the EU ruling was a good thing. But you guys went a step further: you herald M$ as the unsung hero of honest business success, or claim that whatever they did was ethical. I claim there is a difference between behaviour that is permitted, and behaviour that is virtuous.

9/21/2007 02:56:00 pm  
Anonymous LGM said...

Berend

On Friday afternoon I was at a General Motors Holden dealership. I was in the process of buying a new Commodore. During that process I noticed that Holden does not offer a Commodore with the Ford Falcon in-line six cylinder engine. So I decided to apply the thinking of a proper Berend De Boer sort of creature and demanded the dealer fit the Commodore I wanted to buy with the Ford engine. See, I know that I like that engine. It's real good and better by far than the GMH V-6. The dealer refused. "We do not offer that engine as an option," he smirked. So I asked him to explain his position, which he kindly did.

It turns out that not only can you not buy the Commodore with a Ford engine but you can't have it with a BMW or Mercedes engine either. They won't let you have it with a Hyundai engine, a Toyota engine or even a Honda engine. Not even a Chrylser engine is available installed in the Commodore. I didn't ask about installing a Lamborghini engine but I expect he'd have said no.

Anyway, as it happens, it turns out that there are only two GM engines they'll sell it to you with, a V-6 and the Generation 4 small block V-8 (also known as an LS seris V-8). They wouldn't even let you have it with the GM Vortec HP4 big block V-8. GMH supplies the cars to the dealers with a limited range of alternative engines (two engine types, a V-6 and a V-8).

I told him that according to the moral code and philosophy of Berend De Boers everywhere, he and GMH were being naughty and that they were forcing me against my will to buy X+Y instead of only X. Do you know what? He said that if I didn't like what was on offer I could always leave the car yard and not buy a Commodore. He was not about to force me to buy a car. Nor was GMH. He gave me a spec sheet and said, "This is what we offer. You can't force us to hack about with the products, playing hot rod and transplanting engines and stuff. Here are the cars. This is the specification. Your choice is whether to buy one or not. Take it or leave it."

When I explained to him the Berend De Boer theory that I was being forced to buy a Commodore with an engine installed that I did not want, he said some not very uncomplimentary things about Berend De Boer ancestry. I'm not sure how he came to his conclusion, although I understand why he said it and it was certainly most entertaining. Indeed.

So he, a vendor, was prepared to offer for sale X+Y only. One of your infamous "package deals". My choice was to buy X+Y or not buy it. He and GMH did not initiate force. All he did was say, "This is what I have for sale. This is the price. Do you want it?"

Well there was no forcing me to take what I do not want. My decision to purchase or not was voluntary. I gave him the cash VOLUNTARILY.

Notice that while he could not force me into purchasing anything, neither could I initiate force to make him sell me X+Z or even only X. Fancy that!

I was enjoying myself so much with Berend De Boer behaviour I thought I'd go on a shopping spree. Next target was a white-goods outlet. These guys had Fischer & Paykel machines for sale. I looked at the "dish drawer" (it's a small dish-washer). What an extraordinary product. Now this guy had a few Maytag machines in there that he'd received as trade-ins. As it happens I know that Maytags are very reliable and longed lived. They are far more robust than F&P stuff. What I thought would be really good would be to get a F&P dish drawer with Maytag mechanicals installed instead of F&P guts. That's what I asked them for. The response was, ah, stimulating. I guess what the salesman was intending to communicate was that the answer was no. I certainly could not force them into offerring what I wanted. I tried very hard. I even tried to get the dish drawer without any mechanical guts at all. The answer was still no. Actually they got pretty annoyed.

Later on I tried a few white-goods outfits around town last night. You might want to stay away from white-goods outlets for a while. If you do go, for goodness sake, don't tell them your name is Berend De Boer.

It seems that the deal is that they all offer X+Y only and you can take it or leave it. The choice to buy is VOLUNTARILY made by the consumer. These vendors do not intiate force to make the consumer buy anything. They also are not very receptive to being forced to sell X only or X+Z. Definately to be recomended that you don't try your nonsense on with those guys. Really.

By then I was getting hungry. I went to a restaurant and bar. They had a good menu but I told them that while I certainly appreciated their cutlery & plates and I liked the ambience & decor of the restaurant and I thought the menu was OK, I wanted one of their entrees with a McDonalds burger and chips for dinner. The waitress laughed about that and refused. I started explaining the Berend De Boer idea about how they were forcing me to buy X+Y. Things did not go so well after that...

I had so much entertainment with this I reckon I'll try it some more. On Sunday I reckon I'll go to church and demand the minister preach Islam instead of that Christian stuff he normally drones on about. Heck, maybe I should demand he should teach atheisim. No more X+Y. Just X. Perfect!

Berend, by your weird thinking, any vendor can be accused of forcing consumers to buy. It's patent bullshit and it's clearly false. In conclusion, you should stop being so obtuse. Your assertions against M/soft initiating force against the consumer is clearly wrong.

LGM

9/22/2007 06:46:00 am  

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