I believe that Ron Paul's position is that federal antitrust laws are unconstitutional, but he would respect the rights of states to draft up their own (although I'm sure he'd urge caution in doing so).
Nevertheless, I contend that Microsoft is a coercive near-monopoly built on federal copyright law (which itself may in fact be unconstitutional as well...). As such, the many states would be wise to draft up their own antitrust laws, especially while federal copyright laws persist (and quite frankly, I personally believe these should also be drafted at the state level instead, and differences should be a simple matter of state relations).
To those who are wondering why I say Microsoft is a near-monopoly, here's a little essay I wrote up on this when I was bored:
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Most economists simply don't understand Microsoft. They say that Microsoft is so successful because people clearly like their product better than the competitors' products, perhaps because of the merits and features of their product, perhaps because they market at a price people like, etc.
However, this is a myth. I will use a "physical world" analogy to help people better understand why Microsoft is indeed a coercive near-monopoly:
Microsoft makes electric sockets (operating systems). Just about everyone in the world has those sockets in their home (in their computer), and just about every major appliance (program) is built to use them, from washing machines (antivirus software), TV's (graphics card drivers), telephones (wireless card drivers), video game systems (game software), powertools (graphics software, i.e. Photoshop), computers (productivity software), toasters and other random appliances (various novelty software), etc. Nobody really cares about the product itself - this socket isn't necessarily any better than anyone else's socket. Its only real advantages are that it's easy to use (since everyone's so used to it) and damn near every appliance is made to plug into it. However, it has several major drawbacks that competing sockets don't all have:
- Each socket is really damn expensive, and despite the fact that appliances from multiple rooms (computers) can all plug into the same socket, you have to pay extra for that (i.e. each copy of Windows can only be used on one computer).
- Plus, the socket gets really dirty all the time (viruses) and you need to remember to scrub it off with a special, expensive cleaning product (antivirus) if you don't want it to ruin your appliances. In the worst case scenario, you have to take the socket out of the wall, clean the back side of it (bad analogy, but like a hard drive reformat), and then reinstall it to get rid of all the dirt.
- It's made of the most impenetrable material on Earth (it's closed-source and proprietary). That may sound good, since since nobody can tamper with the inside workings of it, but it's actually a bad thing, because if the inside workings of it break, there's no getting inside to see what went wrong and fix it.
Now, unfortunately, the design for this socket is copyrighted and patented a million times over, so no other company can make sockets that are compatible with existing appliances*.
Since all of the existing appliances that people use are designed for Microsoft sockets, people continue to buy Microsoft sockets. They don't really feel like they have a choice, and they see it as just an additional cost of buying a house (computer). Since nobody uses any other sockets, most appliance makers don't waste the time and energy to create extra versions of their products (Mac, Linux, BSD, etc.) that won't sell well. Therefore, it's a "chicken and the egg" situation, and Microsoft's competitors face an unfair uphill battle where they can't just compete on the merits of their socket - they also have to make their own appliances or beg existing appliance makers to make appliances for their sockets (either out of the goodness of their hearts or to be among the first to "get the ball rolling").
Plus, Microsoft employs completely unfair and anticompetitive practices: Among tons of other things they've done in the past, they've used their clout to make special deals that cripple competing sockets' ability to compete, threatened certain big home construction companies (computer makers like Dell) to jack up their socket costs if they even think of marketing anyone else's socket, etc. Because of their size and clout, they can act in many ways like an overbearing government that interferes with competition in private markets (other markets) by giving special deals and subsidies. Therefore, despite the fact that they're a "natural" monopoly (or near-monopoly, as I'll get to in just a moment), their position is very stable and difficult for the free market to break without any kind of outside intervention.
Now, Microsoft is not a 100% monopoly, since product differentiation allows some of their competition to market to various niche audiences that don't really require use of existing appliances. The competition has some slight market share, but it's an obvious uphill battle, especially with mainstream audiences:
- Apple was an age-old socket competitor who fell by the wayside long ago. Recently, they realized that a very small niche of people would be willing to give up their existing appliances as long as their socket had tons of bling that they could show off and feel cool about. They decided to create a new, flashy socket that appeals to trendy young people, and they created a few of their own absolutely necessary appliances and a few fun ones so that these hip kids actually had something to use. However, their market is very limited, and they can hardly appeal to a more mainstream audience that requires use of various existing appliances. Plus, their sockets are very expensive (since they're so fashionable), and the company makes their own mistake (their fault) of requiring you to buy a special room in your house from them (special Mac hardware) just so that the socket can be put there. Once again, that part's their fault though, not Microsoft's...however, given their business model and appeal to young, trendy people with lots of money, they may not even be able to compete at all if they didn't make the extra profits from the required room.
- Linux and BSD were originally made by and for people who just flat-out LOVE sockets. Of course, no existing appliances would work in their sockets, but what can you do, right? Any company looking to make money would have said "screw it" here, but they were socket nerds and socket hobbyists, so they went ahead and made their socket anyway. Then, they decided to start making their OWN appliances: TV's, telephones, video game systems, powertools, computers, and toasters. People generally did this for free, since they knew they wouldn't be able to actually SELL their appliances - hardly anybody uses the sockets! Obviously it's not fair that they and their friends had to learn how to make ALL of these different kinds of appliances - if this market were fair to competition, they would have only had to make a better socket, and all appliances would be compatible. Still, they made their own appliances anyway, since existing appliance makers refused to make their appliances using Linux or BSD plugs (since they don't have a large enough market to sell to). With time, some special businesses realized that all of the steps were in place to market Linux and BSD to a specific audience, who didn't really have need for a large number of existing appliances: Servers. This went over pretty well, since after all, the sockets themselves are so good (and servers only need a few of the provided appliances, rather than the slew of existing commercial ones). That said, breaking into the home market is much, much harder...a family requires use of so many different appliances, and even though the Linux and BSD communities (and companies) make a lot of their own appliances, most people want to stick with the appliances they're used to. Kids want to play the same video game systems they always have (Sims2), not just the ones made by the Linux guys (TuxRacer), and handymen (artists) want to use the tools they're used to (Photoshop) instead of having to learn something else (Gimp). It's a difficult uphill battle...it's making some progress, but it's hardly fair, since Linux and BSD can't just compete on the merits of their sockets - they have to make their own appliances that compete with existing ones, too! In addition, some appliances are very hard to make, like TV's (graphics card drivers). The TV market (graphics market) is very competitive, so these companies copyright and patent their designs, too. The Linux and BSD people have managed to make some TV's of their own from scratch, but they aren't perfect: They don't have all of the features of other TV's, they sometimes switch to the wrong channel (resolution, refresh rate), and they sometimes just don't work for no explicable reason. This kind of stuff just makes it even harder for their sockets to compete.
In conclusion, I hope I've successfully illustrated Microsoft's position as a coercive near-monopoly. Their power is not utterly unbreakable by market forces, but these forces are uncharacteristically slow-moving compared to markets with fair competition. They are slowly losing their dominance, but the tremendous amount of effort it's taking has led me to conclude that one of the following must be true:
1.) Either natural free market monopolies
can occur,
or
2.) Long-lasting copyright laws are unnatural mechanisms that serve to undermine the free market.
*This part is not entirely true, but it's the closest you can get with a "physical world" non-software analogy. Well, I take that back...I could probably make a more complex, realistic analogy: No matter what, competing companies absolutely cannot copy Microsoft's plug. Because of the DMCA and other laws, it's also illegal to take Microsoft's plug apart and look at the inside to see how it's designed (not that they can anyway, because it's made of the most impenetrable material on Earth, and if you ever did manage to open it, everything would be completely mangled and indecipherable - i.e. you can only see the binary code). If you were so inclined, you could design your own electric socket from scratch that attempts to emulate Microsoft's and work with existing appliances (WINE, ReactOS). However, in this case, Microsoft's sockets have about one million holes (API hooks) to plug into, and each hole has advanced, complex two-way communication that's really hard to decipher (and in order to make a compatible product that will work with all appliances, you have to figure out exactly how that communication works). Plus, new holes are added with every update to the electric socket, and new appliances are encouraged to use them. Even that doesn't quite cut it, since in the "physical world" scenario, appliance makers themselves make the plugs, so they probably understand a good deal about how the two-way communication works. In the software world, it's not nearly so easy to figure it out...you could extend the analogy to say that the appliance makers don't make the plugs themselves, and they're given to them by Microsoft instead...however, that's not the best analogy, since that's not really what happens in the operating system world. Anyway, it should suffice to say that competitors CAN make a product that attempts to emulate Microsoft's, and it CAN be done, but it takes decades of passionate work by a loooooooot of people. To explain how difficult it is to do, it's somewhere in the ballpark of asking a bunch of blind men to draw a detailed map of the United States based on some vague comments they once heard about US geography. It can be done, but it takes a long time, a lot of blind men, and constant feedback from people who can pretty much only say, "Yep, that's right," or "Nope, that's all wrong." Also, if it turns out that any one of the blind men was ever in his life able to see a US map, everything he did has to be scrapped for legal reasons. Besides, competitors shouldn't HAVE to emulate Microsoft's product to compete - they should be able to freely come up with something that's better...and they do...the only problem is that existing software (appliances) won't work with their own solutions.
