Re: Where we went astray-- Antitrust and Microsoft

Thomas Dunn <tdunn[_at_]slaw.neu.edu> wrote:
>
> John H. Lederer <johnl[_at_]ibm.net> wrote ...
> >
> > Software is an exception. The product is intellectual property and
> > the marginal cost is often near 0. What is the cost to Microsft of the
> > hundred millionth copy of Win95? The cost of printing a certificate--
> > Microsft has offloaded the other costs (maintenance, repordcution, etc.)
> > to its buyers. Moreover its sales model is incredibly lean-- because
> > despite the misconception Micorsft does not market to the end consumer
> > -- Microsft sells to computer OEM's -- a market in which 90% of the
> > business is probably held by 20 firms.
> >
> > Software is an exception in another way. At one level there is no
> > competition by statute. Windows95 is a monopoly, no one else can make
> > it, because Congress, in its undoubted campaign financed wisdom, has
> > extended copyright and patent law to embrace software. You go to jail
> > if you make Windows95 without Microsoft's consent.
>
> I recently completed a course in Antitrust and am astonished at how much
> I like it. Couple of thoughts. First, it is true that the marginal
> cost to MS of the hundred millionth copy of Win95 is near 0, but, given
> that any developer's marginal cost to produce the millionth or hundred
> millionth copy is nearly 0, can this explain the MS monopoly? Second, I
> agree wholeheartedly that it is a major policy gaff to extend patent
> protection to software; but would you really not extend copyright
> protection? I'm interested in knowing what you and others see as the
> answer to the marginal cost dilemma in software, as well as what
> protections, if any, would ameliorate antitrust concerns.

Actually every developer's marginal cost is not near $0, because most developers have significant support costs per copy of their software. Microsft has had the market clout to shift the suppor costs to the OEM's who load their operating system--a very high percentage of MS' total operating system sales. Similarly most developers have significant sales costs -- Microsft. becauser the bulk of its sales are made through OEM's has very small sales costs, which is why its general advertising for OS's tends to be 'image" advertising.

I have considered two modifications of software copyrighting:

(1) require disclosures of the source code. much as we effectively or particularly require disclosure of other copyrighted material. This might have a very salutary effect. For instance, IBM abandoned supporting Win32 programs in OS/2 as they had Win16 programs because of the conviction that Microsft would make chnages in the Win32 API's that would be hard to keep up with. I think, that with disclosure of the source code, it would be much easier to make functionally equivalent OS's.

(2) change the term of copyright for software

John H. Lederer
<johnl[_at_]ibm.net> Received on Mon Nov 03 1997 - 03:06:23 GMT