[IP] Even More on: Microsoft on the Trail of Google
Begin forwarded message:
From: Barry Ritholtz <ritholtz@xxxxxxxxxxxxx>
Date: July 9, 2004 9:28:09 AM EDT
To: dave@xxxxxxxxxx
Subject: Re: [IP] Even More on: Microsoft on the Trail of Google
Hey Dave,
Everyone seems to be missing the obvious point:
Microsoft has a monopoly on the desktop -- and because of that, there
are certain behaviors they are legally restricted from engaging in (at
least, in legal theory). Microsoft should not be able to disadvantage
competitors by leveraging that monopoly in a way that restricts
competition.
Search is a perfect example: By setting the default to MSN search, and
making it extremely awkward to change it, they automatically become one
of the top 3 players in that space. What would take any other company
billions of dollars to do, they get for, oh, about nothing.
Does that encourage or discourage competition? Apologists say it
encourages it, but I find it hard to see how a dominant company
automatically becoming the #3 player this way encourages Capital
Investment. While there are many many other search players with great
technology, why is it they are denied the #3 spot as a matter of right?
There is a reason these firms are underfunded: I remember sitting on
some Venture Capital committees in the mid 90s -- nearly every software
firm I looked at, at some meeting, someone would say "What's to stop
Microsoft from building a similar functionality into their OS?" And
that would pretty much torpedo that firm's funding. (I'm sure plenty of
IPers had similar experiences)
In my opinion, a large part of the internet explosion was a function of
all this pent up enthusiasm -- both Capital Investment and R&D --
finally breaking out from under the shadow of Microsoft.
That's right, I am -- indirectly -- placing some of the blame for the
internet bubble at Microsoft's feet.
And, it only gets worse. Google is a perfect example: What happens
when an MSN search bar is built into every window, app or utility on
Longhorn? There would not be a need to ever go to Google -- or any
other search firm via a web browser -- because Microsoft will have
built into Windows that usability. Their search doesn't have to be
great -- Hell, it merely needs to be adequate -- and Google is toast.
So much for encouraging competition.
The world's least innovative -- but most relentless -- software company
can imitate the interface, or ape the algorithms, but that doesn't
matter much. What Microsoft does so well is sandpaper away the
competition by gradually turning their own buggy and insecure code into
a very usable piece of software -- over time. By version 5.0, any
Microsoft product based upon someoneelse's innovations is a usable and
often dominant app.
Sitting on a massive pile of cash -- their $70 billion pile (cash and
ST investments) is more than any other company on the planet -- they
can afford to wait. Eventually, they will own yet another market. (Its
one of the reason I own and have rec'd the stock, despite disliking
their methodology. I hate to admit it, but its a fiercely successful
strategy)
That's the power of a monopoly: By tying their existing dominance into
other spaces, they can extend into these other quasi-related areas.
That's why the DoJ settlement was so pathetic, and why the EU is so
determined to stop MSFT's foray into media players.
Google is on the short list of companies scheduled for eventual
"Netscaping." So far, Yahoo and Intuit have escaped that fate. I'm
sure the IPers can think of a few others that have survived and died at
the hands of this monopolists . . .
Barry L. Ritholtz
Market Strategist
Maxim Group
britholtz@xxxxxxxxxxxx
(212) 895-3614
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
How Microsoft plans to destroy Google
http://bigpicture.typepad.com/comments/2004/07/micorosft_chasi.html
On Friday, July 9, 2004, at 08:20 AM, David Farber wrote:
Begin forwarded message:
From: Christian Huitema <huitema@xxxxxxxxxxxxxxxxxxxxx>
Date: July 8, 2004 11:25:55 PM EDT
To: dave@xxxxxxxxxx, ip@xxxxxxxxxxxxxx
Subject: RE: [IP] More on: Microsoft on the Trail of Google (typo
fixed)
The assertion that "There's no way to pick an alternative search engine
which you might prefer, such as Google" is incorrect. The Microsoft
Knowledge Base Article 198279 documents "How to change the default
AutoSearch search page"
(http://support.microsoft.com/default.aspx?scid=kb;en-us;198279). The
procedure documented in the article involves editing a registry key,
which is hard for the common user, but which can be implemented easily
when an ISP is customizing IE for its customers. Users can also
download
a "toolbar".
-- Christian Huitema
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