roundtable: Re: Nader on WINDOWS 95 Problems

roundtable: Re: Nader on WINDOWS 95 Problems

Re: Nader on WINDOWS 95 Problems

Rick Crawford (crawford@cs.ucdavis.edu)
Wed, 2 Aug 1995 21:43:14 -0700 

Date: Wed, 2 Aug 1995 21:43:14 -0700
From: crawford@cs.ucdavis.edu (Rick Crawford)
Message-Id: <9508030443.AA10992@ivy.cs.ucdavis.edu>
To: roundtable@cni.org
Subject: Re: Nader on WINDOWS 95 Problems


Shelly Warwick <WASBB@CUNYVM.CUNY.EDU> writes:
  > I would support a full disclosure requirement - 
  > i.e. requiring a message prior to remote registration that says - in 
  > large font display - when you register this product remotely the 
  > following will happen . . . with an option for cancellation.

Sounds good, but I submit it's not possible to *fully* disclose
all relevant info re a particular technology, especially regarding
its *externalities*  (the registration issue is very different
from the issue of covertly developing a captive market).


T O N Y  <HN0186@handsnet.org> writes:
  > In most cases, where there is a **true** market failure, such as the
  > -failure of the housing industry to provide safe, clean, decent and
  > affordable housing to the poor, I am all FOR government
  > intervention/regulation.  But I do not believe this situation involving
  > Microsoft's WINDOWS 95 is a true market failure --  and hence am not
  > convinced of the need for government intervention.  After all, the
  > people who can afford to buy a computer on which the WINDOWS 95 is
  > compatible, I think, are the same people who can afford to exercise
  > their choice and buy another operating system.

Those able to afford the monetary cost are often those *least*
able to afford the personal time it costs to find/evaluate/install
an alternative choice of operating system, especially when Windows 95
already comes bundled with the new hardware they want to buy.

I certainly wish the public had other *viable* options for intervention
than that by the government.  But the notion of "consumer power" is
highly overrated.  E.g., consumers overwhelmingly prefer less violence 
on TV (that's even reflected in Nielsen ratings), but that's not what 
they get.

I hope a handsnet person doesn't buy the myth of consumer sovereignty.
To give just 1 example, very few users of Prodigy know about its
surveillance and censorship.  True, it was "fully disclosed" in the
fine print of their contract, but who reads the fine print?  And if
they do read it, they assume such boilerplate clauses are standard
(ie, they assume it's a market whose standards are dominated by
big sellers, therefore small buyers have no genuine choice).  Prodigy
censored all complaints regarding Prodigy from its online BBS, so
consumers were kept isolated and uninformed.  Under such circumstances,
Prodigy users could not band together to augment their bargaining power.

Again, re who is big enough to intervene against a market player as
powerful as Microsoft, why did so many people use DOS for so long?
It's a genuinely lousy OS -- as a computer scientist, I wouldn't
even classify DOS as a legitimate operating system.  But consumers
DIDN'T KNOW THEY HAD ANY OTHER VIABLE OPTIONS.  Producers of applications
software (to survive) must target their products to a "winning" OS,
so DOS snowballed and came to *define* a market standard.  If enough
people come online via Windows 95, that could severely limit their
(*and others'*) future range of options in the marketplace.

Thus, due to economies of scale (not to mention cultivation of
what consumers consider as a "normal" and "friendly" interface),
one important externality is raising of the threshold barriers
to entry by new competitors.  To paraphrase Schickele, consumers
would wind up paying what Microsoft's integrated, bundled "market"
will bear  -- not merely the marginal cost of access -- in a situation
not characterized by meaningful (unbundled) competition.  A market price
substantially above the marginal cost of access/production is one
indicator that market failure has occurred.

These, I believe, are the primary dangers of Microsoft's bundling
of network access with Windows.  This sort of argument is not a
knee-jerk attack on big corporations.  Rather, it is very similar
in structure to *environmental* arguments -- when faced with a
significant risk of major and irreversible damage to an ecosystem
(or market), we advocate the Precautionary Principle.

Remember, we're talking about a common information environment.
That falls into the category of *public goods* -- positive
externalities, which are inherently susceptible to market failure.

Whenever the information environment is concerned, we're no longer
dealing with isolated economic decisions by individual consumers.
Rather than genuinely "informed consent", we see the large-scale
*manufacturing* of consent ... as we sleepwalk thru the negotiations
over the social contracts that will constrain our common future.
(that also applies to HR 1555 and its ilk ;-)

-rick    crawford@cs.ucdavis.edu

  "In the technical realm, we repeatedly enter into a series of
   social contracts, the terms of which are revealed only after the
   signing."  [The Whale and the Reactor, Langdon Winner, 1986, p. 6]

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