-----BEGIN PGP SIGNED MESSAGE----- "Billgate.Doc" by J. Neil Schulman
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Copyright © 1998 by J. Neil Schulman. All rights reserved.


by J. Neil Schulman

"...nor shall private property be taken for public use, without just compensation."
--Amendment Five, Constitution of the United States

Bill Gates is likely the most successful self-made businessman in history. With a marketing sense that is both canny and uncanny, and starting with a product that -- the best that can be said of it -- didn't entirely suck, Gates built Microsoft Corporation into the world's most successful personal computer software firm. Now, the Microsoft Windows operating system is on so many personal computers that virtually all software applications have to be designed to operate with it. Because of this, anyone contemplating designing an operating system competitive to Windows has to either license Microsoft's proprietary code and pay a royalty to Microsoft, or cut itself off from the entire marketplace of Windows-compatible software.

In other words, Microsoft has marketed itself into a virtual monopoly of the personal computer operating system business.

Now, because Microsoft has the jump on everyone else in designing and marketing software applications to run under Windows, Microsoft's competitors want to use the power of the federal government to limit Microsoft's ability to bundle software applications with its operating system. Moreover, in the absence of competitive operating systems, consumers worry that Microsoft has no incentive to improve its product. Being too good at what you do is, under the anticapitalist theory of antitrust legislation, predatory. Outcompeting your competition is anticompetitive. In other words, success is its own punishment. Under the theory of antitrust, TV gab host Phil Donahue should have been able to sue Oprah Winfrey for anticompetitive practices when her increasing ratings for her talk show, and his decreasing ratings, drove him off the air.

I also seem to recall that the same people who are now bitching about Microsoft's having unified the pc marketplace's operating system were bitching a few years ago about how there was no uniform standard which would make all computers compatible with each other. There's just no pleasing some people.

Bill Gates is not a criminal. He's just a very good salesman. He's the American dream writ large, starting with nothing but a dream and building it into an empire that has made him the single richest American in history. The idea that there would be any justice whatsoever in using the power of the federal government to punish his marketing genius could only have come about in a society where greed is what you have if you earned it and the exact same greed is called "social justice" or "democracy" if some loser uses the government's force to punish the guy who beat him to the consumer's bucks .

By the grace of Bill Gates's marketing skills, Microsoft may well be a monopoly in the classical- economics meaning of the term. That does raise the prospect that Microsoft could get fat and sloppy, and consumers could suffer.

If that bothers America's computer users enough, there is, in fact, a solution aside from punishing Bill Gates for the crime of being suberb at his job. That solution is the government putting the Microsoft Windows proprietary code into the public domain.

Since the Fifth Amendment prohibits taking private property for public use without just compensation, the federal government would have to compensate Microsoft stockholders (and Bill Gates is the largest single stockholder) for the estimated fair market value of the profits they wouldn't get because their proprietary rights were taken. That's hard to estimate because in the absence of a buyer and a seller there's no such thing as a real-world price; but taking Microsoft's profits for the last ten years and projecting them forward another ten years should do it.

What would that be ... a quarter of a trillion bucks of taxpayers money being handed over to Microsoft? Half a trillion?

Maybe it would be cheaper to ask Bill Gates if he'd like to own New Hampshire.

March 4, 1998

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