Next week I’ll be interviewing antitrust expert Gary Reback on his new book Free the Market!: Why Only Government Can Keep the Marketplace Competitive (buy it here). This is a HBSTech event being held at the Computer History Museum in Mountain View, California.
This is the guy that represented Netscape in its epic legal battle with Microsoft in the nineties, and he was instrumental in convincing the U.S. government and a number of state attorneys general to sue Microsoft for antitrust violations.
In general he’s a proponent of ripping monopolies apart to keep competition strong. I’m generally less eager to kill off the companies that have won. It will definitely be a lively debate, and Google will be brought up more than once.
If you’d like to attend the event is free but has limited seating – register here. We should have archived video available after the event as well.
By the way, the book is an excellent read. It chronicles the big companies in silicon valley and reads more like a recent historical novel than a legal text. He can write.
Looking forward to the video since I’m on the wrong coast to attend in person.
I am most interested in in his opinion on Google, and on Microsoft still being ripped for bundling IE, something they’ve paid for a thousand times over already.
Same here looking for video
Never mind wrong coast, I’m the other side of the Atlantic as well.
I’m also interested in knowing what he thinks about these issues and developments, here’s hoping that Tech Crunch will remember to report it for us, and include transcripts + video.
Sad day for the everyone when you call breaking up a successful company “freeing the market.”
I agree monopolies can be a good thing if they continue to listen to customers and keep prices reasonable. Look at the electric companies that have taken over from the govt, they just scam you. Some monopolies don’t hurt the consumer.
Which monopolies are you suggesting don’t hurt the consumer? Look at Microsoft and IE – they held back the advancement of the web since 2001 and are still doing it because you can’t build websites using modern technniques because IE6 still has significant market share. Just building a standards-compliant website that works in IE6 is like walking a tightrope. HTML5 will be held back another decade because of IE too.
His stance on government regulation of markets seems to be rather self-serving. I’m guessing he was paid well by Netscape, to stop Microsoft from doing something it should be free to do.
I agree Nathan. Gary Redback is a leecher (from his moaning wealthy corporate clients), who is no different from politicians & members of the general public who enacted and supported the unconstitutional and non-objective anti-trust laws. Anti-trust violates property rights which is something that is inalienable.
Objective law requires that folk “know clearly, and in advance of taking an action, what the law forbids them to do (and why), what constitutes a crime and what penalty they will incur if they commit it.”
Anti-trust is a non-objective law, which is highlighted in the following article:
Drop the Antitrust Case Against Microsoft
From the link on Objective law shown above, philosopher & writer Ayn Rand put forward the following arguments:
1) The retaliatory use of force requires objective rules of evidence to establish that a crime has been committed and to prove who committed it, as well as objective rules to define punishments and enforcement procedures. Men who attempt to prosecute crimes, without such rules, are a lynch mob. If a society left the retaliatory use of force in the hands of individual citizens, it would degenerate into mob rule, lynch law and an endless series of bloody private feuds or vendettas.
If physical force is to be barred from social relationships, men need an institution charged with the task of protecting their rights under an objective code of rules.
This is the task of a government-of a proper government-its basic task, its only moral justification and the reason why men do need a government.
A government is the means of placing the retaliatory use of physical force under objective control-i.e., under objectively defined laws.
2)When men are caught in the trap of non-objective law, when their work, future and livelihood are at the mercy of a bureaucrat’s whim, when they have no way of knowing what unknown “influence” will crack down on them for which unspecified offense, fear becomes their basic motive, if they remain in the industry at all-and compromise, conformity, staleness, dullness, the dismal grayness of the middle-of-the-road are all that can be expected of them. Independent thinking does not submit to bureaucratic edicts, originality does not follow “public policies,” integrity does not petition for a license, heroism is not fostered by fear, creative genius is not summoned forth at the point of a gun.
Non-objective law is the most effective weapon of human enslavement: its victims become its enforcers and enslave themselves.
On point 2), Ayn Rand is right on the mark about the use of non-objective law such as the anti-trust. Anti-trust is there a misguided belief that it is to protect consumers, that is the rights to the properties of the producers are being taken off them and given to the consumers enforce by the state thus enslaving the rightful owners of the properties/goods/services.
Anyone who believes that anti-trust is just, is a person who cannot apply reason in an objective manner.
Oh, **** off with this Libertarian ********. (To think I used to believe in it).
Oh boo hoo hoo, poor Microsoft. Monopolies aren’t being ‘enslaved’ when they are prosecuted under anti-trust legislation; where there’s monopolies, you don’t really have capitalism in that marketplace, but a kind of private socialism. Anti-trust regulation helps the free market, rather than hinders it.
Companies strive to avoid the markets they operate in becoming too free (perfect market = no supernormal profits), and will try to eliminate their competitors where they can. It makes sense for them to do so, but it doesn’t help their customers when they have to deal with a monopoly that can charge what they like for shoddy products. Hence government regulation is needed to protect the free market and the benefits it brings.
You don’t even respond to how non-objective law could possibly is valid. Take this into account: what if the speeding limit was set to “not too fast”? Companies are getting punished for a “crime” they can’t know if they are committing and what is that crime?: providing better products and services than anyone else!
The idea that really successful one-company dominated industries are bad is short-sighted and is actually anti-competitive.
In the longer run, if a monopoly (that’s not government backed) doesn’t innovate and provide at a mutually agreed upon price, they won’t survive. Look at the auto industry, 20 years ago, who would have thought there would be so many auto start-ups making electric cars that out-innovate the oligopoly. If you go way back, during the Era of Standard Oil, we had the most innovative progress in that industry than ever before.
This particular case of non-objective law is a necessary evil to paper over a fundamental flaw in the capitalist model. It may not be fair but it’s necessary. If you want capitalism, you have to live with its flaws. You are living in a dreamland if you think that monoploies have to innovate or even provide superior products to survive. As has been demonstrated over and over again in the past, there are plenty of other ways to maintain a monopoly that are often cheaper. Why not just buy off major suppliers by throwing cash at them, or threaten to not sell them your product if they also sell a competitor’s, or lock them into proprietary file formats (a la MS Word) so it’s just too expensive to disengage while keeping the product ‘just good enough’… There’s plenty of other effective strategies for maintaining monoploies that are cost-effective but have nothing to do with innovation or superior products and ultimately are bad for the consumer.
There is no such thing as a truly free market, believing in this or putting property rights on a pedestal is as naive as believing in the communist ideals that enslaved eastern Europe for half of the 20th century.
It’s interesting that in any debate (religion, economics, you name it…) there are always fanatics, who will believe nothing else than their own narrow radical view point, and the rest of us (the vast majority) who believe you need some balance between the extremes.
Anti-trust is as necessary, an unregulated marketplace will result in abuse and lawlessness, just like any society lacking law enforcement would. There also needs to be limits to how these regulations are applied, checks and balances, but without the rule of law and the opportunity of justice for all you cannot have a free society.
Bad monopolies (in the sense that they truly hurt the consumer) rarely exist without protectionist government policies that artificially create barriers to competition.
In a truly free market, with natural low barriers of entry, “bad” monopolies rarely exist for very long. New competition either forces the harmful practices to change naturally, or market share shrinks and eventually the monopoly status disappears.
Its a shame more people than not now see big successful companies as “bad” by default and necessitate govt intervention to fix. Like in so many other areas of our society now, freedom is no longer given a fair chance.
That is true if:
1) Barriers of entry are low.
2) There is a reasonably competitive industry.
#1 is how telecommunication monopolies can pop up. Unless you get vastly new technology, there is no way you can set up your new infrastructure.
#2: Network effects and two-sided markets can kill this.
Imagine everyone had iPhones tied to ATT. How could I break this? All the app developers are writing for the large market, and the only telecommunications service available won’t let me use them. For the former, I could perhaps emulate the iphone, but that would break plenty of patent laws (granted that this is part of the government monopoly).
If you take a look at the history, there is plenty of evidence that there existed plenty of competition in the telecommunications (and any) industry before the government stepped in. *So what* if there are infrastructure issues for potential entrants? Without government intervention, entry to the market is free for anyone willing to compete. In a free market, those who please consumers win, and those who don’t lose. Simple.
If there are infrastructure issues, it might be impossible to compete, as no one can afford to enter.
Monopolies can use their power to enter into other industries, kill competition, and later cement themselves.
ATT quickly became a monopoly. If it could enforce who installed what on its network, it would be nearly impossible to compete with it.
Standard Oil is the same; if it could control the entire distribution system, there is no reasonable way to compete with it.
Looking forward to that event. I wanna see Microsoft discussed as a major topic, and maybe some limelight thrown on possible Monopolistic approach with Windows 7.
Believe me, government is inefficient, self-serving, bureaucratic and CANNOT keep the marketplace competitive, in fact just the opposite it stifles innovation.
Believe me, monopolies are inefficient*, self-serving, bureaucratic** and keep the marketplace non-competitive, in fact they stifle innovation***.
* The free market is supposed to be the most efficient way to allocate resources – monopolies = no free market.
** Try working for a large company.
*** Didn’t see an update to IE6 until Firefox started to enroach on Microsoft’s 99% market share, did we?
Isaac, it depends how you define a monopoly. “One supplier” might be and often is the most efficient way to allocate resources. The important point is the restrictions on entry that government set up.
The premise of the book is hilarious. Competition implies freedom of action–otherwise it’s simply a stage play. To keep the market free, Reback claims, the government must make it non-free.
It sounds remarkably like we need to be protected from Terrible Secret of Space (http://www.newg...rtal/view/33440).
I like “I’ll be interviewing” followed by “It will definitely be a lively debate”. It made me imagine something less euphemistic. A old fashioned “interviewing” ought to be highly entertaining. Go, Mike, Go!
Why do you find the premise so hard to understand? Is it because it’s not black and white? There will never be a perfectly free makret so the goal must be to maximise the freedom of the market. The best way to maximise the freedom of the market is to allow us much freedom as possible while healthy competition exists and for the government to step in to break up monopolies up when competition is stifled. It’s not perfect and nor is is it always fair. But sometimes it’s necessary.
Antitrust law is nothing but a means for losers who buy political pull to hamstring their successful competitors. The only exception is in Europe, where it’s also now a revenue generator for the EU.
The end result is that consumers get crappier products at a far slower rate.
No one is forcing you to buy these products. And if they send a salesman out who puts a gun to your head, you can call the police.
BS. If comcast is the only broadband provider in my area, if I want to be a part of modern society, I am ‘forced’ to buy their product.