Barbarians at the Gates

How would Bill Gates write the job description for his post of Microsoft chairman if he decided to step down? It might read “Opening: Bright man in early 40s, willing to work 18-hour days and pledge most of his earnings to charity. Abilities as a human pincushion for criticism a must.” Maybe Saint Sebastian would apply. He knew how to take an arrow or two (if the paintings of his martyrdom are any indication). Other job candidates might be harder to find. In recent months the US Department of Justice has accused Gates of obstructing competition by software rivals. If the Justice Department wins, Microsoft could break up. What has Bill done to get people’s dander up, and how would the successful job applicant reply to the interviewer’s questions?

Interviewer: Michael Wolfe of New York Magazine wrote recently that Gates is on trial for his arrogance and that “the real meaning of the issue for the court to decide is the difference between the ordinary hubris we tolerate in a democratic capitalist system and hubris of a historic order.” Do you agree?

Job Applicant: Hubris is the Attic Greek term for violence. What violence has Gates done to consumers of his product? It does not occur to Wolfe that one man’s hubris might be the joy of many other men and women. Neither are federal prosecutors too concerned about learning what the public thinks. According to the government, the public is a victim of price-gouging by Gates. Rival software companies such as Sun and Netscape support the Justice Department in this fantasy. These companies have not been able to convince millions of consumers that their products are better, so they have resorted to bending the ears of a few government lawyers and politicians. If prosecutors had as much respect for software consumers as for the complaints of Microsoft’s rivals, they might be forced to realign the compass they use to guide them to victims. A survey done by Citizens for a Sound Economy found that 81 percent of those polled believed Microsoft is good for the US and 52 percent believed that the government brought the court case against Microsoft to help Microsoft’s competitors. The truest poll, voting with dollars, shows that Microsoft is a crowd-pleaser. In spite of big spending by rival companies on such operating systems as IBM-OS/2, Apple, Unix, and GEM, Microsoft has been the top pick of consumers.

Interviewer: Consumers have no choice of operating systems. This gives Gates a monopoly over the software world. Should monopolies be restricted?

Job Applicant: Microsoft has always faced rival operating systems. Even as we chat, Linux is nipping at Microsoft’s tail like a cheetah stretching its spine in pursuit of a gazelle. A 21 year-old wrote it 8 years ago and decided to give it away free. In the last three years, Linux has taken 17 percent of the new server operating system market. With competition like this I am surprised the government is not rushing to subsidize Microsoft against “unfair” competition from upstart companies.

Interviewer: Even if consumers have a choice, how can we have any confidence that they are knowledgeable enough to choose the best system?

Job Applicant: The notion that consumers have intelligence and choose the products that suit them best has never left deep tracks in the brains of politicians and prosecutors. As far back as the turn of the century, the founder of American Tobacco, Buck Duke, saw his giant firm broken up by government trust-busters. Officials argued that Duke was a monopolist. Duke replied, “We simply happen to sell more of the products that people want at a lower price.” Duke did not build his empire by force, but by persuading consumers to pick him. Gates is no different. He may be the richest man in the world, but he cannot force anyone to buy his operating system. This giant must persuade an educated public. This is why he spent over $1 billion to advertise Windows ‘95 as an operating system that could deliver more than the competition.

Interviewer: Isn’t Gates’ fortune a sign that he is gouging consumers?

Job Applicant: Stop gaping at Gates’ fortune as thought it were a hoard stolen by Ali Baba and his 40 business associates. Microsoft’s wealth has to be put next to the losses of dozens of companies who ran the race to build other operating systems and other software. Many firms competed for the prize of the consumer’s favour. If we tallied their losses against Microsoft’s gain, we would see that the contest to serve consumers has not produced fabulous profits. Think of the salaries of the top hockey players. These salaries may look excessive, but they are the bait that makes thousands of youngsters practice for years. Few rise to the top, but without the efforts of the thousands who fall aside, there would be no virtuoso hockey players to delight spectators. The profits of Microsoft reflect, in part, the price consumers pay for selecting the best operating system from a field where competition is rough and many competitors have paid a cost.

The interviewer would save the hardest for last. “By giving away its Web browser free of charge, won’t Microsoft drive Netscape out of the market, and thus stop Netscape from becoming a rival operating system?”

To which the successful job applicant would reply: “I hope so. If Microsoft believes its system is best, it should do all it can to help consumers understand this as well. By giving away its browser it educates consumers. Microsoft is taking a risk. Nothing says consumers will agree. Consumers will lose if government cuts down Microsoft to make room for less able rivals. And by the way, do I get a corner office?”

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Last Modified: Wednesday, October 20, 1999.