Microsoft Hatred FAQ

[David Schwartz]

Peter T. Breuer wrote:

>  claim     1a) Microsoft's tactic is X (fill in, please)
>  judgment  1b) tactic X is somehow not as bad as (sense?) offering
>                "exclusive wholesale deals" (please define)

    Umm, it's not a judgment. Microsoft said you can sell Windows and other 
operating systems, but there will be a charge for every  machine you sell 
without Windows -- if you want to be able to buy Windows wholesale. Someone 
could comply with this by not selling any other operating systems at all and 
never pay the fee. Therefore, this is a lesser restriction than saying you 
can only sell Windows wholesale if you don't sell or offer any competing 
systems. If I have the right to say you can't use my car at all, I have the 
lesser right to impose the lesser restriction that you can only use my car 
if you pay me $10.

    Microsoft's specific tactic was to offer Windows wholesale only as part 
of a franchise arrangement. The franchise arrangement stipulated a fee per 
system sold, whether or not the system included Windows. This is a lesser 
version of the more typical franchise arrangement which only lets you sell 
branded products and doesn't let you sell or offer non-branded products.

    If you want to sell meals with Whoppers in them, you have to get 
permission to do so from Burger King corporate. And they will not let you 
also sell Big Macs in the same store, even if McDonald's had no objection.

    If you owned a Burger King and wanted to offer a competing burger, 
Burger King corporate might let you do so, but it would be totally 
reasonable for them to insist on a fee even for non-BK products sold. This 
is because it is their products, reputation, and marketing that creates the 
customer flow that you are using to sell your products. Similarly, by his 
own admission, it is his ability to sell Microsoft products that allows him 
to have a business at all and it creates the customer flow that he would use 
to sell the competing products. Microsoft's insistence on some money in 
exchange for this is not unreasonable.

    Many companies require you to agree to various types of things in order 
to obtain their products wholesale. The Microsoft Windows wholesale 
agreement was not vastly different from many such agreements.

    If another company with smaller market share made a similar insistence, 
nobody would have raised so much as an eyebrow.

>>     What Microsoft didn't want was someone going to a store to buy a
>> PC with
>> Windows and being told that another OS is better and cheaper.

> Tough - that's what salespeople are for (notionally, in a shop you
> trust).

    So should Burger King be required to allow McDonald's salesman in their 
stores? Or should Burger King corporate be prohibited from disallowing 
Burger King store owners from telling their customers that the burgers are 
better across the street at the McDonald's he owns?

    DS