Wednesday, 18 November 2015 13:10

Libertarian's Corner: The Package Deal and Microsoft

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Libertarian's Corner: The Package Deal and Microsoft

Joseph S. Fulda

Joseph Fulda is a freelance writer living in New York City. He is the author of Eight Steps Towards Libertarianism. The essay first appeared in Economic Affairs, a British journal.

In one of his finest and most enduring articles,1 Leonard E. Read, one of the 20th century's strongest and proudest voices for freedom, elaborated on a remark of Tolstoy's to the effect that when men do things in councils that they would not and could not do in their own name, there lies the beginning of all troubles. I would like to suggest here that the opposite is also true, that when men do things in councils that they would have no problem, ethical or otherwise, in doing in everyday life, the fact that they act in concert makes no difference, ethically or otherwise.

Thus, Microsoft stands accused of parlaying its superiority in the field of operating systems into an advantage in the field of browser technology, multimedia technology, and, most recently, gaming technology.2 Microsoft has gone to enormous lengths to deny these claims, when, as the United States Court of Appeals for the D.C. Circuit3 and the E.U.4 alike found, those denials are not even plausible. Such is the wrong-headed understanding of monopoly power that Microsoft was precluded from arguing, more truthfully and much more powerfully, "So what! Everyone does it all the time!"

What Microsoft has done is what everyone, from Mom and Pop stores to private individuals, has always done: offer package deals. When you go to a restaurant and you order a certain entree, it comes with certain sides. A pair of pants and a jacket comprise a suit. Want the pair of pants without the jacket or vice versa? It's simply not sold that way, for the suit is a package deal. The state doesn't get to step in to decide whether the clothier could break up a suit without too much harm. The suit may even come with a vest, and a pair of pants occasionally comes with a belt. Want the vest without the suit, the belt without the pair of pants? Sorry, it is up to the merchant to decide what goes with what -- and up to consumers, not the government, to reward or punish him for his business sense.

Consider the St. Croix Review. It, too, is a package deal. Some readers like certain authors and topics, while other readers prefer other authors and topics. But it is the editor who decides what appears in an issue. Don't like it? Each issue of the Review is a package deal, and you take it or leave it. Sometimes one will, indeed, be "forced" to buy a magazine or an anthology for just a single article included inside it. Should the state mandate "unbundling" of articles or should magazine and book editors have their professional judgment tried only in the venue of the marketplace? "Ah," you say, "but Microsoft is different. Editors don't try to package better articles with weaker articles in order to parlay an advantage in one area into an advantage in another." Don't they? Anthologies often seek a few "top names" to contribute an essay; magazines and journals, including this one, have distinguished columnists, and newspapers have attention-grabbing headline stories to draw readers into purchasing an entire reading package, just as Microsoft uses the lure of Windows to draw folks into buying an entire computing package. The law even has a name for take-it-or-leave-it contracts: contracts of adhesion.

Individuals do the same thing outside of the commercial sphere. Your best friend has many good qualities to offer you, as does your spouse. But I am sure you would prefer both of them without anything that you would perceive as a fault, just as they would, no doubt, prefer you without anything they perceive as a fault. But neither you nor they have such options: Your best friend and your spouse are packages, and you accept those packages as a whole, knowing full well that both you and they seek to overcome your respective faults by your respective good qualities.

As emphasis in the Microsoft case has been on "unbundling," on separating the operating system from the browser,5 from multimedia software,6 and the like, reams of technical arguments have been made on the issue of whether Microsoft's browser is an integral part of its operating system (it is) or not. What a waste of engineering and legal talent! You are free to take the company's package or not as you wish. It is a contract of adhesion and you must simply choose a radio button; much as you might wish to repackage Microsoft's deals in your own way, since it is Microsoft's software and Microsoft's marketing strategy and Microsoft's capital at risk, it is -- or ought to be -- up to Microsoft to decide exactly what packages to make available to others.

Imagine how destructive it would be if suitors other than the one who eventually became your spouse were able to enlist the government to try to prevent your future spouse from parlaying advantages in one area into advantages in another area, if they were able to attempt to unpackage your spouse or your best friend, in the name of a "level playing field." Imagine if lawyers and psychiatrists were to argue at length as to which qualities were essential to your future wife, and which could be safely unbundled -- without causing her to malfunction too much. Obviously, since you are chuckling as you read this, you get the point. What I want to ask is why this situation is preposterous for you, your spouse, and your best friend, and for the restauranteur, clothier, editor, or other merchant, but not equally preposterous when a large software company is involved. It is a corollary of what Leonard Read argued some half-century ago that what is fine for the individual acting alone is fine when he acts in councils. *

"Principle -- particularly moral principle -- can never be a weathervane, spinning around this way and that with the shifting winds of expediency. Moral principle is a compass forever fixed and forever true."--Edward R. Lyman

Notes

1. Leonard E. Read, "On That Day Began Lies," Essays on Liberty (volume 1) (Irvington-on-Hudson, NY: Foundation for Economic Education, 1952), pp. 231-252. Originally issued as a pamphlet in 1949. An abridged and edited form appeared under the same title in The Freeman 48 (May 1998): 263-271.

2. The fear is that dominance in the Windows market might combine with Microsoft XNA to achieve dominance in the gaming market. See http://www.microsoft.com/xna/.

3. See, generally, United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001).

4. See, generally, 2004 ECJ CELEX LEXIS 390 (July 26, 2004).

5. The U.S. case, n. 3.

6. The E.U. case, n. 4.

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