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Finding smart policy on tech monopolies

By | July 15, 2009, 6:05 AM PDT

Fighting monopolies can be all hell.

Why else would America’s preeminent tool for breaking them up, the 1890 Sherman Anti-Trust Act, be fathered by the brother of Civil War General William Tecumseh Sherman? (Picture from the U.S. Senate.)

Fighting tech monopolies is especially hard, for tech companies are persistent profitable, and move quickly. The government’s antitrust struggle with IBM lasted nearly 30 years. A new action may be on the horizon.

The 1984 Bell break-up was counted as a success, but today telephony is more concentrated than ever. And who can forget the great Microsoft anti-trust case — perhaps only Monica Lewinsky provided journalists so much entertainment during the last decade.

It is against this backdrop that we consider the latest monopoly action, a European Union fine that took Intel from profit to loss during its last quarter. Investors were untroubled. The fine went into the stock price within a day of the earnings announcement.

This might be because Intel’s monopoly, assuming it has one, is a natural product of Moore’s Law. More precisely its corollary, Moore’s Second Law, which holds that as chip complexity increases so does the investment needed to make them. At such huge capital levels we can’t afford a lot of competition.

Then there are monopolies like Apple’s iPod, iPhone and App Store. Is it natural, like Intel’s monopoly, or temporary, like Microsoft’s dominance of office software?

The answer to the question may come down to ease of entry. Is it possible to write and distribute another Office suite? (Yes, if you’re willing to give it away.) Can someone else design an iPhone-like device and app store, perhaps with a different business model, and find success? Google is certainly trying. So, for that matter, are RIM, Microsoft and Nokia.

When competition is moving in Internet Time, monopolies can appear and disappear faster than you can ask whether they have a Clue. Wasn’t it just a few years ago that we all thought MySpace would dominate social networking? Uh, never mind.

Governments are battleships, and lawsuits can be wars. They move slowly, far more slowly than tech competition does. I personally believe that. while the U.S. did not ultimately break-up Microsoft its suit put a burden on the company that slowed it down considerably, and continues to hobble it.

So while I consider myself an antitrust hawk I have learned that in technology the best policy may be that many doctors apply to prostate cancer. Watchful waiting.

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Dana Blankenhorn

About Dana Blankenhorn

Dana Blankenhorn was a contributing editor for SmartPlanet from 2009 to 2010.

Dana Blankenhorn

Dana Blankenhorn

Contributing Editor

Dana Blankenhorn has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement and founded the Interactive Age Daily for CMP Media. He holds degrees from Rice and Northwestern universities. He is based in Atlanta.

Follow him on Twitter.

Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn has been a technology reporter since 1982, a business reporter since 1978, and a writer for as long as he can remember. His Schwab IRA has a few tech stocks in it, most notably some Intel and Applied Materials bought over 10 years ago. But the vast majority of his tiny fortune (emphasis on the word tiny) is invested in mutual funds. He presently writes for no one else but ZDNet, SmartPlanet and himself. But if you've got an opportunity let him know. If he takes the gig he"ll first add it to this disclosure page.

He writes for SmartPlanet and is not an employee of CBS.

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RE: Finding smart policy on tech monopolies
How does Office 10 free online makes Microsoft's dominance of office software "temporary"? Anything but from what I can tell: Windows Live is awesome -- that's actually to my surprise. And Clippy has also been a pain in my side.

Give away all the office software you want; entry to market doesn't mean change. Change is something else.

Agree IPod and IPhone temporary.
Posted by sk.dunnage@...
15th Jul 2009
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OpenOffice
Open Office now has considerable market share, and its formats are being mandated for support by some governments. That's change.
Posted by DanaBlankenhorn
15th Jul 2009
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RE: Online Makeovers for Baby Boomers
We have been living in Montana for the past 5 years and I am not supri sexshop to find it #3 on the "worst" list. Considering a sexy shopmove to Idaho to escapthe high cost of living a low income in MT. There may not be a sales tax here but they get you if you own property!
Posted by marquesthomas
24th Jul 2011
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