The State of Anti-Trust

A lot of folks believe that antitrust law is mainly used for consumer protection.  That may have once been true, but it certainly is not true today.  Antitrust laws are used today by one group of competitors to try to hamstring another competitor in their business, usually one that is kicking their collective butts.

Here is the latest example:

The Justice Department is investigating allegations that International Business Machines Corp. has monopolized the market for mainframe computers, broadening Washington's search for anti-competitive behavior in the technology industry.

The requests, a special kind of subpoena used in antitrust investigations, followed a complaint by [the Computer & Communications Industry Association"”a group with many IBM rivals among its members] to the Justice Department accusing IBM of harming businesses by abusing its dominance of the market for mainframes.

Narry a customer or consumer to be found.  So what is the complaint?

the CCIA alleges IBM began to tighten its grip on the market by not allowing its newest software to be used on competitors' machines.

Waaaaaaaa!  Develop your own freaking software.  The only reason these competitors have a product at all is due to another anti-trust settlement 50 years ago:

For decades, [IBM] operated under terms of a 1956 consent decree with the government that required it to license mainframe technology to competitors.

Roughly the equivalent of Coca-Cola being forced to license its formula to whoever wants it.

But I can prove this has nothing to do with consumers.  Take an earlier, similar case against IBM several years ago.

The lawsuits followed IBM's decision not to license its newest mainframe operating system, called z/OS, to customers of Platform Solutions Inc., a company that made cheaper mainframes that were compatible with IBM's.

In its complaint, Platform alleged that IBM was unlawfully "tying" its software to its mainframe hardware and requiring customers to purchase both.

Congratulations, this company was able to beat IBM on price when they bore no hardware development costs (IBM was forced to license its designs to them to copy) and obviously was a free rider on software as well.   But that is beside the point.  Here is the solution that settled the case:

That case was settled last year, after IBM purchased Platform and ended its business.

LOL.  I am pretty sure that if the anti-trust case had anything to do with customers, that increasing IBM's market share and shutting down a low cost competitor would not have been considered an appropriate fix to IBM's supposedly anti-competitive behavior.  Antitrust has devolved nearly entirely into a legal club to wack a competitor who is beating you in the marketplace.  In Europe, it has become a tool to wack foreign competitors to domestic companies without triggering trade retaliations (e.g. Microsoft, Honeywell).

  • Zach

    After reading a casual summary of the anti-trust case the EU made against Microsoft, I can only come to 2 conclusions:

    1) The average European is too stupid to go to http://www.getfirefox.com
    2) Microsoft makes a lot of money and is not European, therefore they should pay Jean-Claude Soprano^W^W^Wthe EU a lot of money.

    And who uses mainframes anymore?

  • eCurmudgeon

    So does this mean that the FTC's next target is Apple because I can't run Mac OS X on my Dell laptop?

    (Yes, I know about "hackintosh" patches and the like. I'm talking "out of the box" here...)

  • http://thebastidge.blogspot.com thebastidge

    It's almost impossible to get into a monopoly position without government collusion in the first place; it's laughable to think that government is protecting us from it.

  • http://www.itsaboutmakingbabies.com/ Brad K.

    Actually, I want Adobe to license their Creative Suite to Serif and JohnChow.com for distribution under private labels.

    And, yes, Dell and Sony and the South Koreans obviously deserve to distribute Apple's OS and hardware designs at garage shop prices. And let Mahindra (and MahindraUSA) see what they can do with Cadillac and Chrysler models. Umm, actually it looks like Mahindra or the Russians might be making next year's Chrysler models. Anyway.

    The part that hasn't kicked in yet is that the RIAA hasn't chimed in with IBM, crying about copyright infringement.

    And what about IBM's software patent protection? Let the competitors wait 75 years for the copyright protection to run out. Or maybe settle for the 1965 version of IBM's System 360.