Techknow: Esther Dyson's update

Techknow: Esther Dyson's update - This is a tough one. Let me say it: some of my best friends work for Microsoft. The company is revered worldwide for its success. Overall, its products are worth far more to its users in aggregate than they are worth to s

by ESTHER DYSON
Last Updated: 31 Aug 2010

This is a tough one. Let me say it: some of my best friends work for Microsoft. The company is revered worldwide for its success. Overall, its products are worth far more to its users in aggregate than they are worth to stockholders. Nonetheless, I support the US Government's intention to split the company. It's not that I'm pro-government or anti-business; I'm for a proper balance of power between them. Let's consider the situation more closely. Are consumers being harmed? Are users being overcharged?

Certainly not in the short run. In terms of the value they provide, most of Microsoft's products are reasonably priced.

The problem is the long run. Over time, Microsoft's dominance makes it difficult for new companies and new technologies to emerge. Oddly, Microsoft's pitch sounds like that of a government - not the US government, but the old Soviet government. It's convenient for the company to control the software business: things will be more efficient if we take care of everything.

Consumers benefit from the standardisation. Microsoft products work better with other Microsoft products. If we run everything, the promise goes, we can make sure that resources are appropriately allocated, that waste and errors are minimised. People won't waste time on diversionary efforts.

But we see another side of the lack of diversity this creates when computer viruses hit: they sweep through almost the entire population.

In the short term it is indeed more efficient to leave everything to Microsoft. But in the long term some of those wasted resources end up being exciting start-ups that offer new and orders-of-magnitude-better solutions. Both the internet economy and the overall market depend on competition to flourish. Waste and errors can lead to better results in the long run.

The market regulates most companies. But when it can't - when abuse is combined with market power - then government must risk stepping in. Many people would feel more comfortable with a 'conduct remedy', by which the government monitors and controls Microsoft's behaviour, than with a breakup.

But it's what we shouldn't want: government meddling. It's not for the government to run the software industry rather than Microsoft. It's for no-one to run it, but for it to evolve freely through the interactions of many players.

In this case, someone needs to push the reset button, to break up the rigidities of Microsoft's control. Perhaps the market will take care of it. Microsoft is already besieged on all sides - by open-source products, by its own declining stock price, which makes it harder to hire and retain good people. The internet and its new business models are making it tough for the company. Even so, the government is sending the appropriate message.

Free markets are not markets without rules: they are markets where everyone follows the same rules.

In the long run, we are likely to see new products we might not otherwise have seen - perhaps even from Microsoft, which will now have to innovate just a little faster to keep up with the competition. Competition that might include other parts of its former self.

Esther Dyson will be chairing the UK Internet Summit 2000, supported by Management Today, WPP and the New Statesman on Wednesday 11 October.

For details contact Hugo Tagholm: hugo@hmclondon.co.uk

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