My recent blog posts on Microsoft’s Hostile Takeover of Yahoo have painted me, to some, as an open-source zealot, which maybe I am. However, there is another reason why Yahoos won’t work for Microsoft. It’s because of Microsoft’s history of anti-competitive business practices.
I wrote this as a one-liner before, but I decided to expand on this a bit. First, let’s look at the definition of competition. From dictionary.com:
1. of, pertaining to, involving, or decided by competition: competitive sports; a competitive examination.
2. well suited for competition; having a feature that makes for successful competition: a competitive price.
3. having a strong desire to compete or to succeed.
4. useful to a competitor; giving a competitor an advantage: He was careful not to divulge competitive information about his invention.
In business, competition drives success, which — ultimately — benefits consumers. The Bureau of Competition seems to think that American companies should avoid monopolistic practices. Karl Marx didn’t agree. And there are plenty of others that would say that government shouldn’t be involved in such matters.
Through all of these different stances on competition — they all agree that fair play is a must, or consumers suffer. Ok, check, most people would agree that healthy competition amongst business is good for consumers. So now what are some anti-competitive practices? Wikipedia serves us pretty well here: http://en.wikipedia.org/wiki/Anti-competitive_practices
From this page, I took a list of practices, and then we will see if Microsoft has done with each of these.
| Action |
Description |
Microsoft? |
| Dumping |
Where products are sold into a market at a low price which renders competition impossible, in order to wipe out competitors. |
No examples found |
| Exclusive dealing |
Where a retailer or wholesaler is tied to purchase from a supplier. |
Yes. Microsoft works out exclusive deals with hardware manufacturers to lock them into selling Windows, and only Windows, on desktop machines. |
| Barriers to entry |
(to an industry) designed to avoid the competition that new entrants would bring. |
Yes. Entering the PC Desktop market is very difficult because Microsoft Windows has interoperability challenges with other Operating Systems. Some consumers stick with Microsoft Windows because they feel they have no choice if they want to use all of their programs, and this market share dominance prevents competitors from easily introducing new, competing operating systems that would benefit consumers |
| Price fixing |
Where companies collude to set prices, effectively dismantling the free market. |
Yes. The European Union seems to think so, after just fining Microsoft 899 million Euro for its practices |
| Refusal to deal |
E.g., two companies agree not to use a certain vendor |
Yes. According to this paper, the European and Microsoft anti trust cases cited “refusal to deal” |
| Dividing territories |
e.g., you get everything west of the Mississippi, we take everything east |
No examples found - not really applicable to software |
| Limit Pricing |
Where the price is set by a monopolist to discourage economic entry into a market. |
Yes. Windows is bundled with hardware at reduced pricing, sacrificing short term gains for longer term market share and profit from other software such as Microsoft Office, raising the barrier of entry for competition. |
| Product tying |
Where products that aren’t naturally related must be bought together; this prevents consumer choice. |
Yes. Two words. Internet Explorer. See full details on the Microsoft Anti-trust case in the U.S. and EU |
| Resale price maintenance |
Where resellers are not allowed to set prices independently. |
Yes. To be fair, this is common practice |
| Coercive monopoly |
All potential competition is barred from entering the market |
Yes. Reference above or below examples. |
In looking at how many anti-competitive business practices Microsoft employs, we can see why Microsoft is a quintessential example of an anti-competitive company. Still not convinced? Let’s look at some specific notable examples in Microsoft’s history.
Case Study #1 - Microsoft vs. Apple, through anti-competitive business practices, Microsoft dominates it’s way to large market share to become the largest software company, even though Apple had a better product.
Case Study #2 - Microsoft vs. Sun. In an attempt to kill Java, Microsoft stops bundling Java with Windows
Case Study #3 - Microsoft vs. Netscape/AOL. Microsoft employes anti-competitive business practices to take over the browser market, going as far as intentionally crippling Netscape in releases of Internet Explorer. The United States Government steps in and penalizes Microsoft.
Case Study #4 - Microsoft vs. Linux via SCO. SCO receives investment help from Microsoft, and suddenly SCO sues effectively the entire Linux community with the new found funding, spreading FUD everywhere for businesses running Linux. Interesting coincidence.
Case Study #5 - Microsoft vs Real Networks. They settled a suit in 2005
Case Study #6 - Microsoft vs Novell. They settled a suit in 2004
Microsoft has an insatiable appetite to win, at any cost. They play dirty, and seem to disregard the moral implications. They’ll trip you in a foot race, foul you in basketball, or bite your ear a boxing match. All in the name of winning. Now the key question: When does the desire to win become unhealthy?
My answer: When it compromises your integrity.
I have four kids, and although I’m not perfect, I try very hard to lead by example. Among other things, I teach honesty and integrity as a core principal. My kids know that integrity is more important than winning. In my opinion, Microsoft has shown that winning is more important than integrity.
Having integrity as a core value is a critical factor in me choosing what kind of company I want to work for. How then, can I have a position where morality and integrity are so important to me, and work for Microsoft?
The answer: I can’t. And I won’t.
Update on March 28th: I’ve decided to leave Yahoo! because of the impending Microsoft takeover.
