Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition [Hardcover]

Richard B. McKenzie (Author)

Book Description

Publication Date: April 4, 2000

The Microsoft antitrust case is, and will remain, an event of historic proportions. It is a case that has very publicly pitted the legal power of the United States government, the free world's undisputed leader, against the legal power of the Microsoft Corporation. Trust on Trial presents dramatic and compelling reasons to recast our view of modern monopolies and rewrite the rules of business with regard to the new economy companies that hang in the balance. This groundbreaking book argues cleanly and convincingly that antitrust law-the variety being tested in the current landmark case-is useless in today's landscape where technology is changing the accepted standards of business.The author, a notable economist and professor at the University of California at Irvine, conducted a year-long study of the Microsoft antitrust case as the basis for this book. An exceptional narrative of new-economy business practices and an analysis of the most important antitrust case of the last half-century, Trust on Trial presents conclusions that will surely affect business here and abroad for decades to come.

Editorial Reviews

Amazon.com Review

Is Microsoft truly a classic monopoly, whose aggressive pursuit of markets for Internet browsers and operating systems is harmful to consumers and worthy of government intervention? Or has it actually been a victim of aggressive rivals (led by Sun, Novell, Oracle, and IBM) who called in high-level favors to keep Bill Gates & Company out of the lucrative market for network servers? Richard McKenzie, a noted economist with the University of California at Irvine and the author of more than 20 books, is convinced of the latter. He advances a formidable argument on that behalf in Trust on Trial, which maintains "the Microsoft case has shown--and not for the first time--how politics can taint the antitrust enforcement process." Starting with copies of major U.S. antitrust laws, McKenzie shows how cases such as this eventually may affect consumers in both the short and long term. With some people unconditionally opposed to anything out of Redmond, of course, his thesis won't convince everyone the government proceedings are a sham. But even many of Microsoft's detractors should concede that he makes a compelling point, particularly with his overriding contention that the process is usually political. "More than Microsoft is now on trial: trust in antitrust enforcement is on trial," he says. --Howard Rothman

From Publishers Weekly

A professor in the Graduate School of Management at the University of California-Irvine, McKenzie uses the Microsoft antitrust trial to ask, "Are the efficiency goals of the U.S. economy as a whole best served by using existing antitrust legislation to assess the business practices of an industry leader in the New Economy?" His answer is a resounding "no": the motivations behind antitrust actions in the past century remain suspicious, he writes, and such actions ultimately hurt industry. McKenzie ardently believes that Microsoft's unusual profitability (its $8 billion profit in 1999 represents a return on sales of 39%, the highest of any major American corporation) has nothing to do with any monopoly power; rather, he says, it stems from the company's production of superior products, which are sold at prices other firms can't match. The author posits a conspiracy among Microsoft's competitors, who he claims have courted and convinced (unnamed) corrupt politicians to exploit antitrust policy to crush the software giant. McKenzie's rigid ideological position ultimately limits the intellectual reach of his book. In wholeheartedly supporting Microsoft's freedom to act as it pleases, McKenzie often presents unfounded theories. For example, he ominously predicts that any penalties assessed against Microsoft will inhibit innovation in the software industry. Yet earlier he acknowledges that Microsoft regularly buys market-proven software developed by others, which it integrates into and distributes with its own existing products. Thus, McKenzie undermines his own credibility--and he also misses an opportunity to propose more appropriate corrections for market imbalances in the New Economy. (May)
Copyright 2000 Reed Business Information, Inc.

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Product Details

• Hardcover: 304 pages
• Publisher: Basic Books; First Edition edition (April 4, 2000)
• Language: English
• ISBN-10: 0738203319
• ISBN-13: 978-0738203317
• Product Dimensions: 9.3 x 6.2 x 0.9 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 4.2 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #4,200,138 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

19 of 26 people found the following review helpful:

4.0 out of 5 stars A Careful Analysis, May 9, 2000

By 

David J. Hill (Washington, D.C.) - See all my reviews

This review is from: Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition (Hardcover)

Anyone who has followed the Microsoft trial has to be impressed with the skill and flair of the Government's legal team (and less than overwhelmed with the performance of Microsoft's defense lawyers). But putting such professionalism aside, many thoughtful people have misgivings about the Antitrust Division's attack on Microsoft and the trial court's sweeping and conclusory findings. Richard B. McKenzie's Trust on Trial: How the Microsoft Case Is Framing the Rules of Competition is an informative book on the Microsoft case. Professor McKenzie makes noteworthy points about monopoly behavior and the fluidity and competitiveness of the computer industry. He offers an interesting analysis of the reasons why Microsoft gave away its Internet Explorer browser for free, as well as anecdotal insights into the companies and key players involved. He also reminds us that the heart of an antitrust case like this one is that consumers have suffered antitrust injury, of which he sees little or no evidence. That said, Trust on Trial is not an easy book to read for anyone not steeped in economics or antitrust. Readers must endure a number of scholarly discourses on management theory and political science, at least some of which could have used an editor's careful hand. In addition, some points are treated more lightly than some readers might prefer. For example, while McKenzie casts doubt on the validity of the so-called "applications barrier to entry," he could have strengthened his point by several concrete illustrations. As another, the competing views at trial of Microsoft's dealings with its developers regarding Java are hardly mentioned. On balance, you have to want to read Trust on Trial to get something from it. If you do read it, you will get useful insights into the lawsuit and the role of antitrust in today's technologies. And you will be better poised to analyze the next Microsoft battlefield-no, not the remedies phase or the appeals process, as important as they will be-but all those private antitrust class action lawsuits brought by plaintiff's lawyers just waiting to move billions of dollars from Bill Gates' pockets to their own.

18 of 27 people found the following review helpful:

5.0 out of 5 stars Finally, a balanced point of view based on facts!, May 9, 2000

By 

Susan Moe "Susan Moe" (Bellevue, WA) - See all my reviews
(REAL NAME)   

This review is from: Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition (Hardcover)

Trust on Trial is a breath of fresh air and should be read by anyone interested or involved in this historic case. It's based on fact, research, and the dynamics of the new economy in which we live as opposed to the articles written by the popular press which likes to feed into the anti-Microsoft sentiment to generate interest. It's an academic book written by a renowned economist and is not light reading as the author's points are backed up with facts and evidence--not opinion or emotion. It's a book for the independent thinker who would like a balanced view so they can make up their own mind.

3.0 out of 5 stars good ideas, not enough followup, July 11, 2000

By A Customer

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This review is from: Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition (Hardcover)

This book makes many correct arguments, but too often does not flesh them out sufficiently. This is especially frustrating because the meat is there to be had; the DoJ's case IS absurd. McKenzie could have used more input from someone well-versed in computers.

An example: McKenzie mentions Jacksons "application barrier to entry", but doesn't bring up the obvious reasons why that particular argument falls flat on its face. Applications are not magic beans that can detect the underlying OS and only run on approved ones. They are just data that you feed to an OS, like you feed "data files" to applications. So it is entirely plausible to create an application which takes other applications as data. A straightforward extension of this idea is creating a program on, say, Macintosh that can execute Windows programs -- and in fact such programs already exist. This renders the "application barrier" nonexistent, and the entire monopoly charge right with it. But McKenzie missed this entire line of argument.

And, of course, there is Java, which is essentially the same idea. The Judge seems aware of Java's "platform independence capability" but he is too technically ignorant to see that this undermines his entire applications barrier premise. Sadly, McKenzie is, too.

Still a book worth reading, though.