Monday, August 04, 2014

The quest for monopoly power is antithetical to free markets

Microsoft, Comcast and Monsanto all have one thing in common: a desire to systematically eliminate all competition by whatever means necessary, at any cost. There is a problem with this philosophy. First, These three are just a few very good examples, the desire to own or corner markets is a common attribute of American businesses today. Second, once you've eliminated any and all meaningful competition, consumers have no choice but to use your product. This is antithetical to the goal of a free market.

Microsoft rose to prominence through deceit, clever licensing techniques and copyright protection. Their tactics are very well documented. From exclusive software licensing that excludes other operating systems, to partnerships that eventually kill off their partners, Microsoft has deployed a plethora of tricks to keep their competitors at bay. Between the marketplace and the courts, Microsoft has used contracts, threats of litigation and litigation to clear the market of competition. Some memorable opponents include BeOS, Amiga and Netscape - all of them no longer operating. All of them are choices that we no longer have thanks to Microsoft tactics.

In order to avoid further anti-trust action, Microsoft made investments to save Apple in the early 1990s that are now haunting them. But even so, Microsoft and Apple do not a free market make. Many choices in operating systems were lost due to Microsoft and their monopoly power led to entrenchment and collusion between Microsoft and the government.

It wasn't until the free software movement came into being that Microsoft saw a real competitive threat. Here was Linux, a free operating system, growing better by the day through worldwide collaboration, a collection of software that no one could own, but everyone could use, so long as they adhered to the license. And Microsoft could not buy it out to snuff it.

Comcast has taken a different approach. Through intense lobbying, Comcast has been able to hobble the Baby Bells so that they could not compete in the sphere of ISPs. Comcast was able to avoid the designation of common carriers where the phone companies could not. Long after the damage was done, Congress and the state legislatures finally came to the rescue of the incumbent Baby Bells, but by then, Comcast and Time-Warner, with greater investments and higher speeds, established majority market shares at the expense of the phone companies. Once again, the duopolies of cable and phone companies for internet access do not a free market make.

More than a decade ago, small communities, unable to get competitive service for internet access from either the cable companies or the phone companies, began to work on their own projects. They rolled their networks to get world class speeds for internet access at the same cost or less than what the incumbents were willing to offer. This is community broadband.

The cable companies and the phone companies were and are mortified by this competitive threat. How dare those locals build their own choice! How dare they go around us to get great service at a great price! We can't even buy them out to snuff out the competition! Looks like we'll have to get the state legislature to do our bidding. And they did. 20 states have passed laws limiting or prohibiting cities and towns from rolling their own networks.

The FCC is becoming keen to this tactic and has pointed out that cities and towns should have local authority to make their own decisions about internet access. Ironically, some in Congress don't want the FCC meddling in state affairs, even if the state governments are meddling in local affairs.

Finally, there is Monsanto, the whipping boy of the GMO opponents, and rightly so. Monsanto has used their patents and clever licensing to grow a 90% share of the corn and soy bean market. GMO products are everywhere and very difficult to avoid. Their hope, like any other monopolist is that we will just give up and let them get their patents and let them decide what food is best for us.

I'm not kidding about their brand of hope. But there are states in this Union that are rebelling. Take Vermont and Washington. Vermont has a law on the books that requires GMOs to be labeled and is the target of massive litigation on the part of the GMO industry. Washington has at least one county that has banned GMOs. There is huge fight over GMOs in Hawaii, too. Better than 90% of Americans will tell you that GMOs should be labeled. But in the press, there is very little discussion of how Europe requires GMOs to be labeled. Many GMO crops are banned there.

In all three examples above, we see monopolies rise to rule the markets. Each monopoly eliminates or limits consumer choices in the market place. Choice in the marketplace is only restored after citizens rise up to claim their freedoms once again. Constitutions, laws and courts can do little to keep our freedoms while good men stand idle. It is only when we protest, when we show up, do the leaders of our civilization remember who is in charge.
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