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09.12.11

The Business Deception of Exclusive Monopolies and Shared Monopolies

Posted in GNU/Linux, Google, Microsoft at 6:18 pm by Dr. Roy Schestowitz

Night work

Summary: Rebuttal to the argument of uniformity though reduction of competition and cooperation

THERE is a danger inherent in monopoly for many different reasons that necessitated special laws and regulations. Monopolies limit choice, impede competition, reduce quality of service because they can afford to, and typically slow down progress because they lack incentive to improve. In duopoly, there is agreement between two parties to do this together and slice the market, dividing it among themselves. For 3 or more parties, cartels can exist to assure price-fixing and other abusive practices that hurt the market and enrich members of the cartel. All of these forms of industry organisation come about naturally with expansion or a government franchise. It is often being said that it’s acceptable and even beneficial to have monopolies or shared monopolies in particular areas of industry such as energy, water, telephone etc. due to shared infrastructure. Microsoft has been trying to make up excuses along those lines, dishonestly arguing that a Windows plus Office monopoly is a Good Thing in the sense that it standardises desktop computing. This is a false argument because standard APIs and consistent structures across applications can be coordinated such that everything works in cohesion and harmony. Sharing binary data is not the same as sharing water that goes through the same water conduit.

Suffice to say, Linux has been under attack recently — an attack which has cartels behind it. This is not an attack on Linux per se. Linux is among the leading projects that demonstrate healthy collaboration and low cost to customers; Android is an example of that. Now that Android is taking over a lucrative market, its foes come to grips with the fact that it won’t just go away on its own. They therefore try to portray Android as a violation of the law, as if it is illegal to compete. By joining financial resources for extortion through litigation, Linux foes hope to repel and expel their most potent competitor. Had it been MeeGo in this position, they would have tried that too. Apple even threatened Palm a couple of years ago, just as it had introduced WebOS. What gives?

“To call something which is free a “monopoly” is almost like alleging that breathing is free and thus oxygen is monopolistic.”A new pattern of FUD emerges, claiming that Android is a monopoly even though it is free (just as Google search is free and nobody is forced to use it). To call something which is free a “monopoly” is almost like alleging that breathing is free and thus oxygen is monopolistic. If the code is a public asset, then the harm is very much limited.

So how “open” or free (gratis and freedom) is Android really? It is not as bad as Microsoft and Apple would love people to think. Those companies clearly want to crush Android using software patents and incitations of all sorts. Some time in the past we found the allegation that Open Source is “a cartel”. Quite a way to spin collaboration, eh? Trying to criminalise it even.

Well, the bottom line is, what we see here are monopolies or former monopolies showing their hypocrisy, describing what liberates us from monopolies as a monopoly. We oughn’t fall for this spin doctoring.

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7 Comments

  1. Michael said,

    September 12, 2011 at 7:53 pm

    Gravatar

    Wonder how long it will take Roy to understand that IE is free?

    Jose_X Reply:

    What are you talking about? Is this the extent of your knowledge on antitrust law?

    Please don’t force me to explain how if the electric utility monopolist (even if not 100.00% market share) in a city were to raise their rates by 30% and then use those extra funds to cover the cost of paying for a pair of shoes (from a wide line-up of styles) they would give away for free to all clients as frequently as monthly, that this would seriously harm the shoe market and would be violating a number of laws including antitrust laws.

    And as bad would be if after largely owning the shoe market, the utility company would refuse to provide electricity (Windows) to anyone who would not buy their shoes (IE) and would integrate their shoes and electricity in ways competitors of shoes could not easily mimic. Microsoft leveraged IE and Windows monopolies to pressure any potential browser or operating system competition so they could preserve their monopoly pricing.

    Microsoft certainly does not give away Office or Windows or server software that might work best with IE. I wonder where we would be today if the government had not slapped their hands.. Well, if the government had not slapped IBM’s hands, Microsoft would likely not exist today in their current dominant form (as IBM would have had little need for Gates and DOS).

    Michael Reply:

    What am I talking about?

    I am noting IE is free. And Roy says free stuff cannot be part of a monopoly.

    Sorry that point went over your head. Got it now?

    Jose_X Reply:

    Oh, I didn’t catch that part of the story exactly, sorry. I over-reacted.

    It does mention free googling in the paragraph, so the reference was not purely to the freedom of Linux (which was the main theme of the section).

    Michael Reply:

    Fair enough and very respectable for you to acknowledge that.

    I think a case can be made that giving things away for free can be used fairly or unfairly. But Roy does not make that case.

    And Android is given to OEMs for free… and yet Google makes money from the associated ads. Is that right? Sorta a gray area, frankly. It is not like Android is developed for altruistic reasons either. But businesses exist largely to make money – and there is nothing wrong with making money if you are not doing wrong.

  2. Needs Sunlight said,

    September 13, 2011 at 3:57 am

    Gravatar

    As PJ puts it, people are not a dumb as Microsoft needs them to be.

    Michael Reply:

    Sadly often they are.

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