Why Nader's MS plan is flawed

Consumer advocate Ralph Nader's ends are worthy, but his means are way off target.
Written by Dan Farber, Inactive
Let me get this straight. Ralph Nader--former presidential candidate (and close friend of Al Gore), consumer crusader and political activist--believes the way to bring Bill Gates to his knees is for President Bush, in the guise of the Office of Management and Budget (OMB), to mandate that the government limit its purchases of Microsoft products.

In other words, spread the dollars around to Apple, IBM, Corel, Linux firms and other manufacturers to encourage competition and get better pricing. Or as Nader himself told Reuters, "The only consumer in North America who can break up the Microsoft monopoly simply through purchasing strategies is the U.S. government."

In a letter addressed to Mitchell E. Daniels, Jr., Director of the OMB, Nader also suggests other remedies, like having the government "consider a cost benefit analysis to determine whether dominant software providers should make their source code public, in order to enhance interoperability with products offered by smaller competitors." Or, he said, the U.S. government should consider compelling Microsoft to port its Office suite to competing platforms.

Nader even goes so far as to suggest that the federal government buy the code for Microsoft Office outright, and release it into the public domain in order to save the public money and avoid the costly upgrades from Microsoft that are designed to overcome interoperability problems. I wonder what price Gates would put on that software, which has more than a 90 percent market share.

Nice try Mr. Nader but I am not convinced that putting Office code in the public domain would go a long way toward solving the government's dysfunctional IT or cost overrun problems. I'm pleased that you're keeping the heat on Microsoft. So far the Department of Justice and the U.S. District Court haven't been able to come up with the solution to rein in the company. But while your goals are worthy, the means are way off target.

For the sake of argument, imagine Nader convinces the government to force Microsoft to give up or sell its intellectual property and to place limits on what federal, state and local governments can procure from the company.

How about this as a potential way for the scenario to play out: The U.S. government invokes a blockade so that only humanitarian aid, such as Starbuck's coffee and Krispy Crème donuts, is allowed into Microsoft's Redmond, Washington campus. The government also passes a law to make it illegal for Microsoft to sell any of its products within the territorial borders of the U.S., with the exception of Hawaii and Alaska or in states starting with the letters A - M, just to throw them a bone.

I can just see Bill Gates now. He would move offshore, perhaps buy a small or struggling country like Argentina, which could use a cash infusion, and set up shop. Remember, software is very lightweight and transportable. Microsoft could be up and running in a matter of days. Dell and others might move there too to take advantage of tax breaks and to ensure is has a viable business continuing to sell Windows computers (as well as Linux, Unix and other flavors) and export them to the United States.

This situation would open up a big opportunity for the open source movement led by Linux distributors to take over the United States, and create its own monopoly...or duopoly with Apple and Steve Jobs getting a fair share as determined by the government.

On a more serious note, I can understand Nader's quest to protect the public from Microsoft's anti-competitive practices. Some of the remedies suggested by Nader have been entertained by the Department of Justice during the last four years of litigation between the U.S. government and Microsoft. Nine states and the District of Columbia are now contesting the DOJ's watered-down settlement with Microsoft. Final arguments are due June 19 from the Microsoft attorneys and from the nine states and the District of Columbia. A ruling from Kollar-Kotelly is expected later this year.

But it is the Department of Justice that deals with anti-trust issues, not the OMB. Just like any other corporation, the government can wield its purchasing power, but not by legislating limits on what the government's vast array of agencies can buy to solve their business problems. Windows could be thrown off an approved list within the government procurement bureaucracy, but at what point does that action become illegal and anti-competitive to Microsoft?

Today, government technology officials and the private sector are trying to figure out how to deal with security holes in Microsoft products. Debates are raging about whether open source software is more or less secure that Microsoft's code. Could various branches and departments of government use their clout as a huge Microsoft customer to exert some leverage? For sure. Just stop buying the products because they don't meet the requirements for the job or adequate return on investment. Start using OpenOffice.org or StarOffice instead of Microsoft Office, for example. If the government or any company believes that a monoculture environment -- meaning too Microsoft-centric in this instance -- is less cost-effective and more vulnerable to hacking, then mix it up with products from other vendors.

Software is a dynamic marketplace, and while Microsoft has risen to the top, it is embattled on several fronts to maintain its dominance and to enter new markets. Check out what is going on in Germany and Taiwan. The German government recently made a deal to IBM computers running SuSE's version of Linux for desktops and servers. The Taiwanese government plans to start an open-source project that could save the country as much as US$295 million in royalty payments to Microsoft.

Nader has the right idea. Consumers of technology should have choice. But technology doesn't mix well with government regulations that dictate how to build and distribute technology products. Let the courts deal with Microsoft's predatory behavior, and let the government, private industry, and individual consumers decide if Microsoft's products are worthy of their investment. If the courts don't provide sufficient protection for consumers, then start voting with your checkbook. The climate is changing. Microsoft is the desktop king now, but business dynasties have risen and fallen without the heavy hand of government.

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