Tech Central Station: Will Justice’s Controlled Burn of Microsoft Also Torch Silicon Valley?

“The Department of Justice plans a controlled burn of Microsoft.
At a hearing last week, Judge Jackson showed his eagerness to
strike the match. And, just like the U.S. Park Service at Los
Alamos, neither Justice nor the judge seems to understand the
system with which they are tampering or have any interest in
heeding adverse weather predictions.”

“In a speech on May 10 entitled “The New Wealth of Nations,”
[Treasury Secretary Lawrence H.] Summer pondered some of the
implications of the new technological world. He pointed out a
problem in a world in which information-based goods involve “very
large fixed costs and much smaller marginal costs”: One of its
characteristics might be “that the only incentive to produce
anything is the possession of temporary monopoly power-because
without that power the price will be bid down to marginal cost and
the high initial fixed costs cannot be recouped.
So the
constant pursuit of that monopoly power becomes the central driving
thrust of the new economy. And the creative destruction that
results from all that striving becomes the essential spur of
economic growth.”

“Summers’ musing may be right or it may be wrong; there is room
for argument. But it is a serious idea, and it is not part of the
world view of either the Department of Justice or the judge. And if
it is right, then it could create a gale that drives their
controlled burn out of all control.”


Get the Free Newsletter!

Subscribe to Developer Insider for top news, trends, & analysis