Author(s)
Albert L. Nichols
Source
AEI-Brookings Joint Center Policy Matters 01-13, May 2001
Summary
This short piece asks whether Microsoft’s growth came about by fair or foul means.
Policy Relevance
Policy makers should note that a firm's growth will often help consumers, and that competition can bypass a dominant firm.
Main Points
- Some contracts between Microsoft and personal computer makers in the early 1990s asked computer makers for “minimum commitments” to Windows, and to pay for a license for Windows on every computer sold.
- Expert consensus is that this had little impact on Microsoft’s growth. Testifying for the Department of Justice, Nobel Prize-winning economist Kenneth Arrow said it made only a “minor contribution”
- Microsoft’s decision to “tie” its browser to Windows helped consumers; if browsers and operating systems were produced by separate firms, neither would reduce prices of one to sell more of the other.
- The Internet hosts many new competitors to Microsoft, including Sun, Oracle, AOL-Time Warner, and IBM.
