There are two related articles in today’s papers that – one on technology and the other on yesterday’s Microsoft antitrust hearing. A New York Times article discusses thin client computing, a technological development that will provide new competition to traditional PCs and desktop software. And a Washington Post article describes how a group of six states and the District yesterday asked a judge to extend the terms of Microsoft’s antitrust settlement through 2012.
The more I read about the state AG request for continued oversight of the Microsoft antitrust consent decree, the more I’m convinced that they’re engaging in political grandstanding instead of sound legal principles.
Quoting from the Post:
Kollar-Kotelly said that its [the consent decree’s] effectiveness should not be measured by
Microsoft’s market share, because the 2002 decree did not specifically
set out to reduce Microsoft’s dominance. Its intent was to correct
Microsoft’s anticompetitive practices, she said.
Remember that in the U.S. monopolies are not per se illegal – just the illegal maintenance of a monopoly. But Microsoft’s desktop dominance is far from secure. Quoting from the Times:
The business strategy behind the thin-client push is different than it
was a decade ago. Today, thin computing is not part of an
anti-Microsoft crusade. The technology has “matured, by and large,
around delivering the Microsoft desktop experience remotely,” said Tad
Bodeman, the global director of Hewlett-Packard’s thin-client business.
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Today Judge Kollar-Kotelly, the federal judge in charge of quarterly reviews of Microsoft’s consent decree compliance will hold a conference in Washington, DC. But remove any visual images you have of a court, with wood paneling and expensive suits – instead, thanks to State AGs and Google, this review process is beginning to look like a three-ring circus.
A new ACT paper describes the changes in the PC software market and why it’s appropriate to let the Consent Decree expire. Microsoft’s largest competitors are now simply using the consent decree process as a way to trip up the company at every turn. Competitors like Google, Symantec, and Adobe have all used the system to file nuisance complaints that have slowed Microsoft’s ability to deliver new features.
It’s time for this review process to end, because this antitrust case is sooooo 1990s.
Innovation and competition—driven by applications that harness the power of the latest technologies—continue to transform the landscape of the software industry. The on-demand model has risen to challenge thick-client desktops from Microsoft, Apple, and Linux.
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Sometimes it takes traveling abroad to remind me of the many good qualities of the U.S, including a wide variety of restaurants, fixed shower heads, and ESPN. But seriously, there is one feature of the U.S. that is the envy of the world – innovativeness.
I’m here at the Economic Forum in Krynica, Poland and it’s very obvious that Europeans see red, white and blue when they think of innovation. And that’s because when it comes to innovation, the world is not flat in the Thomas Friedman sense. There are geographic spikes of innovation – and world leaders all want to erect a Silicon Valley in their nation. As Steve DelBianco and I have written about in our paper on innovation, in today’s global economy, innovation is a key component to economic growth and societal prosperity.
But how does innovation work, and why do some nations like the U.S. and Japan excel at creating innovative products and services? That was the topic of ACT’s first panel (out of four) here at the Krynica economic forum, “Localizing the Lisbon Strategy – How to Cultivate Innovation Ecosystems.” The Lisbon Strategy is the European Union’s innovation strategy to increase European jobs and economic growth.
Olaf Gersemann (Editor at Financial Times Deutschland and author of Cowboy Capitalism: European Myths, American Reality) moderated the panel. He painted a bleak portrait of European competitiveness. Purchasing power parity, unemployment, productivity growth, R&D investment are all below U.S. levels.
Waldemar Ingdahl (President of a Swedish think tank) echoed Olaf’s pessimism, and said that the EU would need an 8% growth rate over 20+ years to catch up to the U.S. He also mentioned that the EU could do a better job of educating small and medium enterprises (SMEs) about intellectual property and bemoaned the European Commission’s competition policy, which he described as focusing too much on competitor welfare at the expense of consumers.
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Well I apologize if I’m starting to sound like a broken record by asking this question yet again, but what would be wrong with metered pricing for broadband pipes? I have asked that question several times before, most recently in my post earlier this week on wi-fi piggybacking. I pose it again today in light of another article about a handful of customers apparently having their broadband connection cut-off because of excessive downloading.
According to a front-page article in today’s Washington Post entitled “Shutting Down Big Downloaders“:
As Internet service providers try to keep up with the demand for increasingly sophisticated online entertainment such as high-definition movies, streaming TV shows and interactive games, such caps could become more common, some analysts said. It’s unclear how many customers have lost Internet service because of overuse. So far, only Comcast customers have reported being affected. Comcast said only a small fraction of its customers use enough bandwidth to warrant pulling the plug on their service.
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I’m heading to Poland this weekend to speak at the Krynica Economic Forum, the most prominent public policy conference for Central and Eastern Europe. My organization, ACT, is sponsoring a daylong session on public policy and innovation, on which I’ve organized four panels:
- Localizing the Lisbon Strategy – How to Cultivate Innovation Ecosystems
- Open, Closed or Somewhere In-Between? The Future of ICT and Software Innovation
- Copyrights and Patents – Incentives for (or Barriers to) Innovation Creation?
- Distributing Your Innovation: Avoiding Trade Barriers in a Flat World
We’re fortunate to have some top-notch speakers, including the Vice-President of the European Commission Gunter Verheugen, the Assistant Director of the World Intellectual Property Organization Francis Gurry, prominent open source advocate Larry Rosen, and Federico Etro, a professor at the University of Milan and President of Intertic (an International Think-tank on Innovation and Competition).
"Do Napisania" w Polsce (I’ll be writing from Poland)
In July, I mentioned the interesting comparison chart that Verizon’s Link Hoewing put together comparing contracts, competition, coverage, prices, new services, and more in both the U.S. and European cellular markets.
If you’re interested in this subject, there’s a new report out by the American Consumer Institute entitled “Comparison of Structure, Conduct and Performance: U.S. versus Europe’s Wireless Markets.” The report finds that:
* The U.S. wireless market offers more choice and is less concentrated than any Western country’s wireless market;
* U.S. consumers use an average of 800 wireless minutes per month, while most European consumers use less that 200 minutes per month;
* U.S. wireless prices are the lowest in the world, with the exception of Hong Kong; and
* The combination of higher usage at lower prices presents compelling evidence that the overall consumer welfare derived from wireless service is higher in the U.S. than internationally.
“In summary, a comparison of international statistics suggests that the U.S. wireless market, in fact, leads its European counterparts, and the U.S. wireless market, compared to Europe, appears to be more competitive and vibrant. The contention that concentration leads to higher prices, lower usage and decreasing consumer welfare does not appear to be a U.S. problem, and furthermore, the contention that the U.S. lags the European market and needs some regulatory remedy is without empirical merit.”
Read the whole thing here.
WARNING: The PFF Aspen Summitt served to both educate and inspire me, so expect a flurry of blog posts over the next few days.
While reviewing my notes during my 24 hour trek back to DC (most of which involved sitting in the Denver airport) I realized that Eric Schmidt said a lot of interesting things despite my intitial impression that his speech was rather devoid of content. Unfortunately for Dr. Schmidt, most of my conclusions are rather critical.
During the middle of his remarks, Schmidt pointed out that our web-powered world changes conventional thinking about business models and industry integration. In the past, Schmidt observed, vertical integration–buying up assets like, mines, railroads, and mills–cut costs by allowing one company to take a good from raw material to finished consumer good, without the transaction costs of swapping ownership throughout the process.
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My boss Tom Lenard of PFF penned an editorial for the Wall Street Journal yesterday about the Google-DoubleClick deal. The essay was co-authored by Paul Rubin, a PFF adjunct fellow and a professor of economics and law at Emory University. Lenard and Rubin argue that the fears about the Google-DoubleClick deal have been overstated:
Those who complain about Google’s purchase of DoubleClick make two claims. Both are flawed. The first argument is that, since both firms have a large market share of their respective spheres, a merger would be monopolistic. The flaw is that the two companies undertake activities that don’t overlap. Google places text ads mainly on its own Web sites and search-result screens. DoubleClick delivers display ads from advertisers to Web sites. It creates no ads and controls no Web sites. Even if we believe that Internet advertising is a distinct market (debatable, since it comprises only about 5% of all advertising) the combined firms will not gain any market power since they do not have any business in common.
The second argument comes from privacy advocates who have filed a brief with the FTC. They say the merger “could impact the privacy interests of 233 million Internet users in North America.” The FTC’s antitrust function and its consumer protection function are fundamentally different. Indeed, the more information markets have, the more competitive they are. If “privacy” advocates have their way, there would be less information and markets would not work as well.
Marketers use information. Some people have a cockeyed notion that if this information benefits marketers, it is to the detriment of consumers. Wrong. Consumers benefit when marketers provide them with information about products, especially new products, that they may want. A free flow of information enabling more efficient “targeting” of consumers is to their advantage.
They go on to conclude that: “Both the antitrust and the consumer protection branches of the FTC should leave this acquisition alone. It will create benefits with no increase in market power and no harmful reduction of privacy.” Read the entire piece here.
More bad press for the muni wi-fi movement. It seems like each week brings another story of how things haven’t quite turned out as planned. This week, it’s Business Week with a story about “Why Wi-Fi Networks Are Floundering.” In the piece, author Olga Kharif argues that:
The static crackling around municipal wireless networks is getting worse. San Francisco Wi-Fi, perhaps the highest-profile project among the hundreds announced over the past few years, is in limbo. Milwaukee is delaying its plan to offer citywide wireless Internet access. The network build-out in Philadelphia, the trailblazer among major cities embracing wireless as a vital new form of municipal infrastructure, is progressing slower than expected.
These potholes in the nation’s wireless rollout of civic ambition—criticized by many as an improper use of tax dollars—are hardly the exception. For the road is getting bumpier for cities and the companies they have partnered with in a bid to blanket their streets with high-speed Internet access at little or no cost to users.
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ASPEN, Colo. – Federal Communications Commission Chairman Kevin Martin on Tuesday offered two proposals that he said would address concerns about objectionable content and add “access to new voices in the media.”
Martin repeated his proposal to require cable operators to sell television programming a la carte, or on a per-channel basis. “The ability to pick and choose among the content being offered them by the cable operators,” he said at the Aspen Forum on Communications and Society here.
Parents would have “much have meaningful choices” in the programming they could watch, he said. Currently, “there is little or no incentive for the market or programmers to respond” to parents’ demands for less racy content.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.