Big company research budgets

AT&T's Bell Labs, Xerox's Palo Alto Research Center (PARC, and IBM's Watson Research Center, were all tremendous sources of innovation over the past 50 years. Interestingly enough, those were all companies the DOJ went after on antitrust grounds.

An article yesterday on ZDNet communicated the worry among American researchers and scientists that the United States was falling behind other countries in Research & Development investment. I agree with their concerns, particularly in light of my enthusiasm for the growth of global markets for goods and services. America's comparative advantage has long been high technology and knowledge industries, and those strengths could be jeopardized by a failure to invest adequately in new technologies of the future. I would also say America's current tendency to let religious conviction trump scientific principles is bound to hinder American growth in biotech, arguably the most important new area of technology in existence, but that would be too controversial (oops, already said it).

What made my ears perk up while reading yesterday's article, though, was the following paragraph:

For much of the 20th century, major breakthroughs in technology came from large research laboratories like AT&T's Bell Laboratories, Xerox's Palo Alto Research Center (PARC), and IBM's Watson Research Center.

What's interesting about all three of those research groups was that all were owned by large companies which came under the Department of Justice's antitrust magnifying glass at various times in their lives.

Most here are familiar with the antitrust case that resulted in the breakup of AT&T. Others may be vaguely aware of the more quixotic case against IBM that got cancelled by the Reagan administration after over a decade of litigation without a conviction. Xerox, however, was a seriously massive corporation in the 60s and 70s, and they were forced into a consent decree in 1975 that forced them to license large numbers of their patents to third parties.

Now, many of you disagree with my approach to antitrust. Hey, it's my cross to bear, I guess. But I think most of you would agree that these large research organizations were extremely good for the American economy. Such research bodies require lots of money with few strings attached, and only companies with fat bank accounts can afford this kind of largess. On that count, Microsoft has now become one of the biggest spenders on R&D, devoting over 7 billion / year to it's research arm, which isn't chump change, given that Microsoft "only" pulls in 40 billion / year in revenue.

I consider large R&D budgets a bullet item in the list of beneficial things large companies do (and no, I'm not saying a list of negatives doesn't exist). Add to that list Korea Telecom's (KT's) part in spearheading the growth of broadband in South Korea and Nippon Telephone & Telegraph's (NT's) role in the explosion of wireless innovation in Japan (through it's NTT DoCoMo subsidiary), and it might make you sit up and take notice. Now, if only I could convince you that large companies acquire market dominance for consumer-beneficial reasons (which is why consumers buy their products in the first place), we might end up with a conception of antitrust that actually works.

A man can dream.

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