Trust on Trial: How the Microsoft Case Is Reframing the Rules of Competition

by Richard B. McKenzie

Book Overview

Trust on Trial, a hard-hitting examination of competition in the modern marketplace, tackles the monopoly issue head-on. Through the lens of the Microsoft case, the first large-scale antitrust... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 0738204811
• ISBN13: 9780738204819
• Release Date: April 2001
• Publisher: Perseus Books
• Length: 309 Pages
• Weight: 1.02 lbs.
• Dimensions: 0.7" x 6.1" x 9.2"

Customer Reviews

Richard McKenzie: Trust on Trial

As an economist specializing on public policy, I have found the Microsoft case fascinating enough to have plowed through the economists' testimony in the case, the briefs from DOJ and Microsoft, the judge's findings, and a bit of the interpretive writings. Mc Kenzie proved an excellent guide. My assessment is that the government totally failed in establishing the critical premises that Microsoft had a monopoly and predatory practices were a plausible strategy. The government's case on these points barely existed, and its lead expert contracticed himself and his prior writings. In contrast, Microsoft's expert economist present a coherent argument about why Microsoft should not be considered a monopolist and why the charges of predation were invalid. The government sought to hide this deficiency by concentrating on the tertiary point that Microsoft was aggressive. The government's experts and the judge got so steamed up about the appearances that they forgot the fundamental economic point the aggression without monopoly is useless. The judge showed no understanding of the economcs and was not particularly astute about what any experience computer user knows. For example, he swallowed the government nonsense about the difficulties of downloading. (If it were so difficult, this site would not be as good as it is. )McKenzie's careful, economically sound review of the case gives a perspective sadly lacking in the journalistic accounts that I have seen (including the press and magazine articles that were the basis for two of the three available journalistic accounts). McKenzie, in particular, concentrates on the germane issue of why Microsoft should not be considered a monopolist out to overcharge consumers. He shows that the case really is one of rivals, unable to compete in the marketplace, running to Washington for aid. The book is a readable introduction to these critical economic points. It tells how the case developed and what the underlying economics are. People wanting a treatment of what really matters in the case should skip the journalists and try McKenzie. He is evidence that technical problems that journalists fear to treat can be made understandable.

The Government's case is baseless and destructive

This book by Professor McKenzie shows how baseless and destructive the Government's antitrust case against Microsoft is. He shows that the case is harming the economy, consumers, and the stock market. Significantly, in 1998 the Government lost the primary part of the case that it is now pursuing against Microsoft, the combining of a brower with the operating system. Those of us who use computers know that Microsoft has continually made the process easier throughout the years.The Government's case is certain to fail, and will only serve to help elect George Bush, because of its devastating impact on the world's single most important company, and the American stock market. With friends like Joel Klein, Al Gore doesn't need any enemies.David W. Lee Edmond, Oklahoma

A must read for all business owners

With the precision of a skilled surgeon, Richard McKenzie's words cut through layer after layer, exposing the Justice Department's flawed case and Judge Jackson's even faultier powers of reasoning. This is a must read for all business owners who believe that the product or service they created is their own, to do with as they please. As McKenzie points out, it was not consumers who complained to the Justice Department about unfair practices, it was Microsoft's competitors. So, if you own a business and think you'll survive as long as you make your customers happy, think again.

powerful insights on every page

The technological revolution should be causing a fundamental reevaluation of the government's role in the economy. Whether that reevaluation takes place, or government policy stays rooted in 19th-century understanding will be determined for some time to come by the Justice Department's case against Microsoft. For a accessible and lively account of the issues involved and what is at stake, I can think of no better book than Trust on Trial by Richard McKenzie. Is Microsoft a monopolist? The Justice Department says yes based on considerations that were thought relevant when the Sherman Antitrust statute become law in 1890. McKenzie makes a compelling case that these considerations no longer provide useful guidance to antitrust policy. Microsoft may have a dominant market share, but it certainly is not acting like a monopolist. Monopolists are suppose to restrict output and raise price, but Microsoft has done exactly the opposite. McKenzie explains how the network and "lock-in" effects that the justice department argues Microsoft are using to exploit consumers have rendered traditional notions of monopoly obsolete. Instead of these effects allowing microsoft to exploit consumers, they explain why competition in the software industry, and other technology industries is more intense than ever and why this competition, which is enormously beneficial to consumers, leads to firms that temporarily dominate their industy. And the only hope these firms have for prolonging this dominance is by not behaving like a monopolist. In addition to providing powerful economic insights, McKenzie also points to the real motivation driving the Microsoft case, and it has nothing to do with protecting the consumer. The justication for antitrust action is to protect the consumer by protecting competition. Unfortunately, in reality the motivation has more often than not that of protecting competitors who find they can do better by influencing politicians than by satisfying consumers. This certainly seems to be true in the Microsoft case, and McKenzie pulls no punches when laying out the evidence. It should be emphasized that this book is not a puff piece for Microsoft. McKenzie has no financial or emotional stake in Microsoft's successes of failures, and he points to the blemishes and warts on Microsoft's behavior. McKenzie's motivation seems to be nothing more than a desire that sound economic analysis be used to determine what is best for the consumer--something that should be the dominant motivation of the Justice Department, but which obviously isn't. A great book. Enjoyable and informative.

Finally, a balanced point of view based on facts!

Trust on Trial is a breath of fresh air and should be read by anyone interested or involved in this historic case. It's based on fact, research, and the dynamics of the new economy in which we live as opposed to the articles written by the popular press which likes to feed into the anti-Microsoft sentiment to generate interest. It's an academic book written by a renowned economist and is not light reading as the author's points are backed up with facts and evidence--not opinion or emotion. It's a book for the independent thinker who would like a balanced view so they can make up their own mind.