Speaking of natural monopolies and predatory entry – Netscape is 20 years old today!

You show your age when you remember that people used to pay $49 to download the Netscape Navigator browser.

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Yes,people used to pay for browsers until nasty Microsoft came along in act of predatory entry started giving its Internet browser away from free in the hope of monopolising the market  once Netscape went out of business  when it would jack its price up again to recoup the intervening losses.

After the first browser war, the usage share of Netscape had fallen from over 90 percent in the mid-1990s to less than one percent by the end of 2006.

During the 1990s, Microsoft competitors — Netscape, IBM, Sun Microsystems, WordPerfect, Oracle, and others —pressed the Justice Department to sue Microsoft for tying Internet Explorer to Windows even though only one of them, Netscape, had a browser.

The demise of Netscape was a central premise of Microsoft’s antitrust trial, where the Court ruled that Microsoft’s bundling of Internet Explorer with the Windows operating system was a monopolistic and illegal business practice.

After losing on appeal , the Department of Justice announced in September 2001 that it was no longer seek to break up Microsoft and would instead seek a lesser antitrust penalty. Microsoft decided to draft a settlement proposal allowing PC manufacturers to adopt non-Microsoft software.

As William Shughart and Richard McKenzie observed:

Microsoft’s critics have advanced a number of economic theories to explain why the firm’s behaviour has violated the antitrust laws.

None of those critics has articulated why or how consumers have been harmed in the process.

Instead, the furious attacks on Microsoft have focused on the injuries supposedly suffered by rivals (on account of Microsoft’s pricing and product-development strategies) and by computer manufacturers and Internet service providers (on account of Microsoft’s “exclusionary contracts”).

Before former Judge Robert Bork became a lobbyist for Microsoft’s rivals, he said in The Antitrust Paradox:

Modern antitrust has so decayed that the policy is no longer intellectually respectable.

Some of it is not respectable as law; more of it is not respectable as economics; and … because it pretends to one objective while frequently accomplishing its opposite … a great deal of antitrust is not even respectable as politics.

A simple rule for a complex world: the moment that evidence is tended to a court about what happened to the competitors in a lawsuit under competition law, that court must dismiss the suit out of hand.

Too many lawsuits under competition law are designed to protect the consumer from the scourge of lower prices!

The best proof that a merger or other business practice is pro-consumer is the rival firms in that market are against it. Why would a firm be against a merger or other business practice that raises the prices of their business rivals?

HT: HistoricalPics

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