Some notes on conservative rhetoric and the Microsoft trial, among
other things, plus a batch of URL's.

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The Microsoft trial has been first-class entertainment, but now we
turn to the more serious business of remedies.  Although the legal
and media focus is on Microsoft and its employees, the more important
issue is the precedent that this trial sets for business in a world
of pervasive information technology and the systemic market failures
to which information technology contributes.  It is useful to divide
the issues under three headings: (1) definitions, (2) rules, and (3)

In my opinion, the most important thing that the Microsoft trial can
accomplish is simply a clear definition of what constitutes a monopoly
in a high technology world.  You would think that this is clear, but
in fact some of the traditional tests for monopoly don't work well
anywhere near the software industry.  That's because those tests
derive from the very idealizations of neoclassical economics that the
software industry confounds.  This situation has opened a vacuum for
the most remarkable sophistry, such as the libertarians' often-heard
claim that monopolies can arise only through government intervention.
This idea remains puzzling until you press them on it, whereupon it
transpires that that's simply how they have defined the term.  What's
needed, therefore, is a restoration of common sense to the definitions
of basic words.  Simply compelling Microsoft to admit the simple
fact that it is a monopoly would be a great accomplishment, not least
because the company would then be open to civil suits by the firms
that its business practices have unfairly harmed.  The precedent would
then permit the legal system to do its job without the danger that
government antitrust action will be further dampened by shifts in
political fashion.

Having established what a monopoly is in high technology, the next
question concerns the rules by which monopolists must live.  It is an
extremely well-established principle of antitrust law that monopolists
must live by different rules than other firms, and that a competitive
action by one firm can be anticompetitive if taken by a monopolist.
The question at hand, then, is not this basic principle but rather
its application to the particular case of high technology industry.
The crucial starting-point here is the market dynamics of compatibility
standards.  Control of de facto standards is a license to print money,
firms that control such standards frequently become monopolies, and
companies that acquire monopolies based on the control of standards
should be enjoined from abusing them.  This may sound like a stiff
claim, but observe that it takes for granted a more fundamental point,
that high technology monopolies are likely to arise in great numbers.
It is not about preventing monopolies from existing, then, but only
about preventing them from abusing their position.

The mechanisms for the abuse of proprietary de facto standards have
yet to be taxonomized fully, but the most important form of abuse is
the practice of leveraging one's monopoly in one area into a monopoly
in other areas.  This is why so many observers have been calling for
Microsoft -- and, by extension, other firms that control standards
-- to publish its API's on an open, early, and equitable basis.
It should be emphasized just how limited and reasonable a request
this is: it applies only to those cases where a firm that controls
  standard competes with other firms in one or more markets for the
provision of complementary goods, for example applications programs
for an operating system, and it does not prevent a firm from end-
running the equally well-established anti-bundling rules by endlessly
adding functionality to an existing standard.  Another potential
measure to prevent leveraging of standards is open publication of
pricing and contract terms with OEM's and other firms that incorporate
the standard into their products.  The list of forms of abuse goes
on, and those who fight these battles every day can provide a more
detailed list of abuses and their remedies than I can.

Finally there is the matter of punishment.  Microsoft's behavior has
been so extraordinarily and systematically abusive that it has become
common to call for extreme measures such as breaking the company into
several parts.  Although it would be great to see the look that such
an action would produce on a certain billionaire's face, I don't see
that it would serve any purpose.  Two very different break-up plans
are being circulated.  One would create several companies that each
have the rights to sell precisely the same range of products that the
current Microsoft sells; the idea would be to create a competitive
market in the sale of these products.  This is a truly awful idea.
It would lead to an instantaneous price war, with the winner being
whichever company has the best access to capital.  If more than one
company survives long enough to differentiate its products from the
others, then the standards will fragment, leading to even more rampant
incompatibility than Microsoft already deliberately induces as a
device to compel its customers to upgrade their software.  And faced
with the potential for fragmenting standards, buyers will go with
whichever company they expect will have the largest network of other
buyers, meaning almost certainly whichever company Bill Gates works
for.  The result of this mess will be precisely like the situation we
have today, only a lot worse, not least because the resulting monopoly
will be effectively immune from further corrective action.

A second proposal for breaking up Microsoft would divide it along
product lines, perhaps placing the operating system in one company and
the applications in another.  This is another terrible idea.  It will
not stop the operating system company from leveraging its monopoly by
incorporating a steady stream of features, including the features in
the applications.  The government and the courts will never stop being
called upon to referee the proper dividing line between the operating
system and everything else.  This proper dividing line does not exist;
"operating system" is not a category of nature like "liver" or "head".
Once again the result would be much like the situation we have today,
only worse.  Even though it would be fun to say "Baby Bills" over and
over, the idea makes no sense.

Another proposed remedy is to compel Microsoft to publish the source
code for its programs.  This too would certainly produce entertaining
facial expressions, but what exactly would be its point?  One point
would be to make visible any anticompetitive behavior that is hidden
in the functionality of the code.  Many of the accusations against
the company do take this form, and someone should certainly perform
a proper taxonomy and legal analysis of code-based market abuses to
determine whether forced publication of source code would actually
be a plausible means of preventing them, and whether other remedies
against those particular abuses would be likely to work just as well.
Any such precedent should be defined carefully, and it would take
some work to decide what precisely Microsoft has done to deserve this
particular sanction.  Much as we might all sympathize with open source
software, it is not at all clear that the market for software can
function at all if a firm cannot retain the full benefit of privileged
knowledge of the programming techniques it has developed.  I would
speculate that a leading principle here is that forced publication of
source code is a counterbalance to especially marked network effects.
Having established a critical mass of customers, a software firm can
then count on obtaining many more customers because the imperative
need for compatibility would make the use of any competitor's software
prohibitively expensive in comparison.  The counterargument here is
that the market works perfectly well when competing firms are each
trying to establish a network, assuming that customers are thoroughly
informed and each vendor has a similar capacity to subsidize early
adopters.  The test for compelling a firm to publish its software,
then, may rest not simply on the existence of network effects but the
use of monopoly rents to establish them.  This is clearly the case
with at least some of Microsoft's products.

At the end of the day, the quite horrid behavior of Microsoft in its
dealings with other firms has been a mixed blessing.  On the one hand
it draws attention to a set of fundamental issues that are otherwise
hard to explain in sound-bite form.  On the other hand it may lead us
to overlook these important issues in favor of a superficial morality
play about this one company.  So we have to remind ourselves that it's
not about personalities.  Rather, it's about the political economy of
a world that is rapidly becoming dependent on software.  Even at its
most capitalistically extreme, the production of software resembles
the workings of political process or the scientific community or both
as much as, or even more than, than it resembles Adam Smith's market.
Our old intuitions do not work properly, and in many cases they give
us answers that are competely the opposite of the easily observable
truth.  One thing that is clear is that we have to get this stuff
right as soon as possible.  Standards dynamics are path-dependent:
once they head off in a given direction, neither governments nor
markets can easily set them straight.  Getting the Microsoft case
right, then, is not just a matter of bringing a particular set of
rogues to justice, but more fundamentally a matter of determining
whether the future of information technology will be increasingly
distored by the perverse incentives that rewarded that roguish
behavior in the first place.

Now it's time for another episode of "What If Normal Americans Were
Allowed to Talk Like Conservatives?".  You may want to skip this.

Conservatives want everything in society to be organized by the
market, and they want to free the market from all moral constraints.
The sorry results of this conservative war on morality are nowhere
more evident than in the Microsoft antitrust trial.  The Reagan-era
policy of watering down the moral standards of the marketplace gave
the go-ahead for an orgy of white-collar crime and sent a signal that
anything goes.  This dumbing-down of values has produced a pernicious
moral decay that is now visible to those who will look.  Because
everyone assumes that activist appellate judges will impose their
own radical views in the end, the real value of the Microsoft trial
has been the glimpse that it has provided into a bizarre culture
of lying and cheating on the part of the monopolist elites.  And
yet conservatives' cynical use of perjury and obstruction of justice
for crass political gain in their most recent coup attempt has so
discredited these serious charges that nobody has even murmured about
applying them to the much more compelling case of the elites.  These
sophisticates live in a parallel reality, completely oblivious to the
civilized norms of behavior that ordinary Americans take for granted.
Do they believe their lies?  The question doesn't even make sense.
Modern conservatism has learned its language from the wizards of
public relations, and in the language of public relations the concept
of truth cannot even be expressed; all that exists are "perceptions"
and "messages".  What "we" say is truth and what "they" say is lies
and spin, simply because that is how the words are used.  This is
the thoroughgoing relativism, the demolition of reason and meaning,
into which the conservatives have sealed themselves, and into which
they are trying to seal us.  The assault on morality, indeed on the
very possibility of conceiving moral values, is not a side-effect
of conservatism.  It is conservatism, and its arrogant dogmas pour
all day from the bottomless sewer of the conservative-dominated media.

This concludes another nauseating episode of "What If Normal Americans
Were Allowed to Talk Like Conservatives?".  Aren't you sick of people
who talk this way?  I am.

Alan Wexelblat observed that one valuable book was missing from my
bibliography about industrial, graphic, and information design: Louis
Rosenfeld and Peter Morville, Information Architecture for the World
Wide Web, O'Reilly, 1998.  Also omitted and recommended by others
are: Kevin Mullett and Darrell Sano, Designing Visual Interfaces:
Communication Oriented Techniques, Prentice Hall, 1995; and Darrell
Sano, Designing Large-Scale Web Sites: A Visual Design Methodology,
New York: Wiley, 1996.

Some URL's

the dancing hamsters

an especially interesting design firm

analysis of the cable companies and Internet architecture

article about new online privacy protection technologies

Motorola Piano Platform for spontaneous wireless neworking

article on Microsoft and Linux  (really)

remedies in the Microsoft antitrust case

it's that time of year

Political Change for the Information Society

privacy problems in MS Office

Internet-Based 'Collaboratories' Help Scientists Work Together

Statewatch (European civil liberties organization)

intelligence resources from the Federation of American Scientists

Yorkshire CND campaign to close the NSA station at Menwith Hill

Freedom for Links

Virtual Institute of Information

Honeyguide Web Log

interview with George Lakoff

The Internet2 Project

The New Age of the Book

Smart Communities report from Canada

Museums and the Web

American Antitrust Institute

articles on's valuation

ACLU Defend Your Data campaign

Microsoft and the GUID Tattoo

International Trepanation Advocacy Group