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Should Regulators Design Computer Software?

March 21, 2008

Computerworld reports that a committee of regulators has a copy of the next version of Microsoft Windows, aka Windows 7, schedule to ship in 2011 and are evaluating it to ensure that non-Microsoft components can replace certain features provided by Windows.

The settlement of Microsoft's anti-trust case contained a ruling specifying that, when there are competing providers of a "middleware" feature, Microsoft must provide open interfaces for competitors to integrate their feature into any Microsoft operating system.

This is an example of regulators favoring an academic theory of "competition" over the consumer. Most computer users don't want to assemble their own operating system out of components. While some power users and IT professionals enjoy reading reviews in PC magazines, trying new products, tweaking their system, and appreciate the subtle differences between one search product and another, the average user wants an operating system that "just works" out of the box with a useful combination of features. As with any product, the companies that create the operating systems must determine what features their customers would like and at what price.

A trend throughout the evolution of computer operating systems has been the absorption of more and more features into the core product itself. New computer software products often are invented by peripheral or niche firms, which then sparks a flourishing of competition, with the better products being absorbed by the operating system vendors and integrated into their products.

Other niches in the software industry are the result of outside firms attempting to compensate for deficiencies in Microsoft's products. Most of the anti-malware and computer security software industry for PCs is an example of this. If Microsoft had done a better job at securing their operating system, this entire industry would be much smaller, or perhaps not exist at all.

In recent years, Microsoft has made some efforts to improve the security of their Windows product. To the extent that they are successful in doing this, it reduces the need for consumers to purchase additional anti-virus and similar software. To characterize this as some kind of an anti-competitive unfair advantage for Microsoft is ridiculous.

The committee mentioned in the article is tasked with ensuring that Microsoft does not exclude competitors who wish to offer features similar to those in the Windows product. By creating an increasingly integrated operating system — something that Apple Computer's evangelists frequently criticize Windows for lacking — Microsoft is filling a need and reducing the necessity of scarce resources being used by other firms to fill this need. The opportunity cost of having, say, ten search vendors, is that these programmers are not available to create other software products, perhaps products that do not naturally fit within any operating system.

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