• September 17, 2021

Exclusive: The Case for Another Antitrust Action Against Microsoft

 Exclusive: The Case for Another Antitrust Action Against Microsoft

“Since its own brush with antitrust regulation decades ago, Microsoft has slipped past significant scrutiny,” argues a new article from The Atlantic.

But it also asks if there’s now a case for another antitrust action — or if we’re convinced instead that “The company is reluctantly guilty of the sin of bigness, yes, but it is benevolent, don’t you see? Reformed, even! No need to cast your pen over here!”

Right now, it’s not illegal to be big. It’s not illegal to be really big. In fact, it’s not even illegal to be a monopoly. Current antitrust law allows for the possibility that you might be the sole player in your industry because you’re just that well managed and your product is just that good, or it’s just cost-prohibitive for any other company to compete with you. Think power utilities, such as Duke Energy, or the TV and internet giant Comcast. Antitrust law comes into play only if you use your monopoly to suppress competition or to charge unfairly high prices. (If this feels like a legal tautology, it sort of is: Who’s to know what’s a fair price if there isn’t any competition? Nevertheless, here we are…) Yet if bigness alone is enough to draw scrutiny, Microsoft must draw it. Courts have disagreed on what size market share a product or company must own to be considered a monopoly, but the historical benchmark is about 75 percent. Estimates vary as to what percentage of computers run Microsoft’s Windows operating system, but Gartner research puts it as high as 83 percent

Biden, Khan, Senator Amy Klobuchar, and others are asking whether consumers suffer any nonfinancial harm from this lack of competition. Is switching from Windows to Apple’s Mac OS unnecessarily hard? Is Windows as good a product as it would be if it faced more robust competition? When Windows has major security flaws, for example, billions of customers and companies are impacted, because of its market share. If we’re wondering whether crappy airline experiences are a competition problem, should the same question apply to crappy computer security? In fact, in areas where Microsoft faces strong competition, it’s reverting to some of the behaviors that got it sued in the ’90s — namely, bundling. Microsoft and Amazon are essentially a duopoly when it comes to cloud services… Microsoft offers its big business customers an “integrated ecosystem” of Windows, Office, and its back-end cloud services; some analysts even point to this as a reason to keep buying Microsoft stock. That’s just smart business, right? Yes, unless you’re at a disadvantage by not taking the bundle. Some customers have complained that Microsoft charges extra for some Windows licenses if you’re not using its cloud-computing business, Azure…

Microsoft does much more that we’re happy to call “evil” when other companies are involved. It defied its own workers in favor of contracts with the Department of Defense; it’s been quietly doing lots of business with China for decades, including letting Beijing censor results on its Bing search engine and developing AI that critics say can be used for surveillance and repression; it reportedly tried to sell facial-recognition technology to the DEA.

So why does none of it stick? Well, partly because it’s possible that Microsoft isn’t actually doing anything wrong, from a legal perspective. Yet it’s so big and so dominant and owns so much expensive physical infrastructure that hardly any company can compete with it. Is that illegal? Should it be?
It’s now the world’s second largest tech company by market valuation — over $2 trillion and even ahead of Google, Amazon, Facebook, and Tesla (and behind only Apple). For the three months ended in June, Microsoft’s net income rose 47% over the same period a year ago, according to TechCrunch, with a revenue for just those three months of $46.2 billion.

The Atlantic argues Microsoft has successfully rebranded itself as nice and a little boring, while playing up the fact that it lost a decade in consumer markets like smartphones because it was distracted by its last antitrust lawsuit. Yet meanwhile it’s acquired major tech brands like LinkedIn, Minecraft, Skype, and even attempted to buy TikTok, Pinterest, and Discord (as well as “almost two dozen game-development studios to beef up its Xbox offerings”). And of course, GitHub.

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Reporters Team

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