The judge in the Microsoft trial compared the company to Wal-Mart on Tuesday and wondered if the software giant may be playing the role of a "benevolent despot or monopoly," after a witness began using an analogy of the supermarket industry to explain barriers to entry in the software space.
Economist and final Microsoft witness Richard Schmalensee was trying to explain that a person who lives in a town with a supermarket could still open a grocery store and have a decent chance of success. Schmalensee, dean of MIT's Sloan School of Management, said the person who built the store was much like technology companies that design products to compete with Microsoft.
The dean was attempting to address the part of the DoJ's argument that centres around barriers to entry in the software space. Several government witnesses have claimed that Microsoft's dominance makes it almost impossible for makers of competing platforms to get a foothold in the operating systems market.
But as Schmalensee made the grocery store analogy, Judge Thomas Penfield Jackson balked. He said the scenario sounded like the whole Wal-Mart phenomenon. He then wondered whether there's competition to Wal-Mart. "While your competitor is building his little neighbourhood store, you are building to become a supermarket, and your competitor has fewer and fewer customers because they are looking for products in your megamarket, and your competition is always trying to play catch-up," the judge said. "You may have a benevolent despot or a monopoly," he said.
Schmalensee replied that benevolent despots have short reigns.
He then noted that that a megamarket's competitive prices and wide selection did not automatically squelch competition. He said that costs to entering a market where there's a dominant player are not necessarily barriers. As evidence that Microsoft did not have any kind of monopoly -- benevolent or otherwise -- Schmalensee argued that technologies such as Java, Linux, and Web appliances have changed Microsoft's competitive behaviour, indicating that Microsoft was not a monopoly. He also pointed out that other companies such as Sun Microsystems Inc. and venture capitalists seem perfectly confident that they can compete with Microsoft and have been betting heavily on platforms that compete with Microsoft.
Schmalensee also listed Web-based applications such as calendaring as technologies that have a chance to supplant Windows. But the judge seemed sceptical. "The concept to me seems very attractive," he said. "I can't imagine why ISVs [independent software vendors] aren't writing applications like that in droves."
Microsoft attorney Michael Lacovara assured the judge that software developers were in fact doing so, citing applications such as Quicken's Web-enabled software.
Take me to the DoJ/Microsoft page.