March 1st, 2007
The EC wants to set prices
I figured that title would be blunt enough to represent the weird territory the European Commission has blundered into. Neelie Kroes and company are now of the opinion that the EC gets to act as judge of what is considered "innovative" and determine what Microsoft is allowed to charge for that technology.
Interesting notion. Ignore for the moment that, in market systems, the value is determined by someone's willingness to pay. Let's pretend that Ms. Kroes' new notion actually make sense, and proceed to make radical revisions to the pricing structure of other products we buy on a regular basis.
I rented a horror movie recently from Blockbuster that was so astoundingly bad that I had to stop halfway through and turn it off because I was actually bored watching it. It is my honest opinion that the director of that film doesn't have an innovative bone in his body. Therefore, not only should I not have had to pay to see his film, but I should be able to rip the film to disk, post the result to a web site, and distribute this dross to all and sundry, for free.
Ditto for music. I can think of several bands that in MY opinion you'd have to be crazy to pay money for the right to listen to. Therefore, sorry, RIAA, it's not people's willingness to buy your products that determines the price people will pay, but some group of government bureaucrats that determines the "worthiness" of payment.
I recently visited a Louis Vuitton store, not because I was going to buy anything there, but because my girlfriend wanted me to see how ridiculously expensive the bags were even though, quality-wise, I think I'd find better manufacturing standards through an L.L. Bean catalog (my girlfriend is cool that way). Those bags shouldn't be free, of course, because it costs something to make the bag. But, given the construction standards I viewed during my "examination" of the bag, I judge that the price should be whacked to about a hundredth of what it is currently marked.
I remember from art history class a painting that was named, quite simply, "Black Quadrilateral" (by polish artist Kazimierz Malewicz) which was supposed to represent something about the human experience. Well, as I said to others then and I still think now, I find it to be the most ridiculous instance of artistic expression ever devised, and think people would be crazy to pay real money for that tripe. So, after compensating the gallery for the cost of the canvas and paint, the "artistic work" should be donated to "the people" and allowed to be passed around on street corners, for free.
There are a lot of truly insipid TV shows on television. Ad executives should lobby governments to force broadcasters to allow them to post advertisements within shows the price for which is linked to the "innovative value" of a particular broadcast (which in some cases, would be free). I've seen many Google ads pop up on web sites that have nothing to say, or show the design skills of a 2-year old armed with crayons and a big white wall in the living room. Companies who purchase those ads should have the right to insist that they not be charged when that happens. Charge only applies when the ad appears on a site that some government agency determines to be culturally worthy.
No, I'm not saying Microsoft's protocols are "insipid." They are, however, the protocols used by the dominant operating system in the world (a dominance, consequently, CHOSEN by consumers), and have value through that fact irrespective of what certain groups of people think of the technology. It's the efficiency difference between centrally-planned economies and market-based systems, and underlies the reason why price-setting is a VERY bad idea.
I'm sure many readers will chime in with the notion that "well, Microsoft has been ruled a monopoly, and Google / NBC / some other company has not." Fine, but are there not some basic MARKET rules which must be followed when you implement policies that are supposed to FIX the MARKETPLACE? A basic MARKET principle is that the value of a protocol is predicated on what people are willing to pay for it. Granted, the EC has complicated things considerably by making Microsoft release many things that they would have preferred to release as implementation and not specifications others could implement.
However, forcing Microsoft to release specifications for formerly proprietary protocols and charge nothing for it runs into "expropriation" territory, not to mention price fixing, and that is EXACTLY the kind of thing that the European Court of First Instance ruled was illegal in past cases that overturned previous EC rulings.
Will the Court of First Instance put an end to all this nonsense? It might, but I might also win the lottery tomorrow.
Antitrust: a nice idea in principle, but stupid in practice once humans get their hands on it.
John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup. See his full profile and disclosure of his industry affiliations.
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| 03/01/07
