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What The Media Tell Americans About Free Enterprise

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May 1998


Gates: More Power than Market?
Reporters Continue to Ignore Microsoft's Bundling Failures

The March issue of MediaNomics noted that in the stories about the Justice Department's antitrust case against Microsoft, reporters had failed to mention what many economists had observed: The record of Microsoft's feared ability to tie products to its operating system is spotty at best.

Well, network reporters are at it again. On April 21, when Microsoft attorneys and the Justice Department clashed in federal court, all three network evening news shows ran stories about the case, but they all ignored Microsoft's "bundling" record.

This is not to say the networks were completely biased against the giant software maker. All either mentioned arguments against the Justice Department case or ran soundbites from those sympathetic to Microsoft.

For instance, NBC's Pete Williams, in addition to running a soundbite from a Microsoft competitor, ran one from an antitrust historian, who argued that the computer industry changes so fast that "by the time the case was over, whoever won, the computer industry would bear no resemblance to the computer industry today. And it would end up describing ancient history rather than current events."

While ABC's Peter Jennings ominously warned that "millions of everyday computer users are still anxious that the more omnipresent Microsoft becomes, the more we computer users will have to do things the Bill Gates way," his colleague Betsy Stark noted that "Microsoft supporters say with one standard to conform to, the cost of making a computer has gone down, and so has the price of buying one."

And though CBS correspondent Bill Whitaker spoke of Microsoft "force feeding its new Internet software to the vast number of computer makers who use its Windows operating system," he also ran a soundbite from Microsoft's Rick Rule, who said that "the issue here is ultimately whether, in our economy, we're better off having the goverment get involved in making product decisions."

But they all simply assumed that Microsoft is powerful enough to make customers buy what they don't want. As Wayne Crews, fellow in regulatory studies at the Competitive Enterprise Institute, has noted, such bundling fears are overblown.

"A popular myth today is that a savvy company can routinely leverage a 'monopoly' in one product to force on consumers a product they do not want. Companies lack this ability," he writes. "Microsoft was unable to sell consumers on its Microsoft Network rival to America Online -- even though MSN had been 'bundled' with the Windows 95 operating system. Similarly, Microsoft Money still lags behind Quicken." Crews further notes that "Netscape, not Microsoft, dominates today's browser market, and retains every opportunity to maintain dominance by satisfying customers."

As MediaNomics goes to print, the Justice Department and several state attorneys general are set to block the release of Windows 98. In reporting on these events, will the networks continue to ignore Microsoft's less-than-perfect record of tying products to its operating system? 


Rich Noyes


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