Saturday, January 06, 2007

Microsoft as a corporation

Are corporations really evil? Do "the corporations" want to brainwash you, control the media, and make themselves rich?

Do you really believe that?

As a student of economics, hearing people say stuff like, "Linux is better because it's not controlled by a corporation, and Microsoft sucks," makes me want to cry. Let me explain why.

There re four main types of businesses in the United States: Sole proprietorships, partnerships, corporations, and limited liability companies. The difference between partnerships (and proprietorships) and corporations is that corporations are not dissolved when the owners depart, corporations have to file more information with the government, and corporations are treated like people in court. Limited liability companies are small businesses (possibly with only one member) that - as the name implies - have less liability than proprietorships. Creditors can claim the property or assets of the owners of proprietorships and partnerships if the businesses owned by them collapse, but LLCs are not vulnerable to this.

So what exactly makes corporations evil? That's a serious question I'm asking. What's wrong with corporations?

The purpose of businesses, excluding non-profit organizations, is to make money; let us not delude ourselves. Companies don't exist to make the world a better place or provide children with flowers. Proprietors, partners, corporations, and companies all want to make money. So how do you make money? Thornton Wilder wrote it most plainly:

"A million is made by producing something that everybody needs every day."
--Horace Vandergelder, The Matchmaker

These are examples of useful things: Computers, breakfast cereal, paper, clothes. Not coincidentally, all those things are manufactured and sold by corporations.

Let's talk about computers. A while back, I claimed that Microsoft had a monopoly on the desktop OS market for two reasons: Microsoft has patents with which it can threaten other companies, and Microsoft has deals with major PC manufacturers. However, I'm going to correct myself. Microsoft does not have a monopoly on the desktop OS market.

Patents are not necessarily an indicator of a monopoly. Microsoft may have patents on code inside Windows, but other companies have patents on software (IBM, NTP, etcetera.). Microsoft's patents haven't threatened the development of Linux, Apple OS, or other operating systems. That makes it apparent that having patents does not automatically make a company a monopoly.

Microsoft's deals with Dell, HP, and other companies also don't make Microsoft the only game in town. Nothing prevents a person from dual-booting Ubuntu or FreeBSD, and Microsoft sure as hell isn't going to stop Apple from bundling Apple OS with its computers. Also bear in mind that it's possible to get a refund from PC sellers if you can prove that you chose not to accept Microsoft's terms of use when Windows' license agreement was presented to you. If Microsoft persuades PC manufacturers from bundling copies of Linux, that is Microsoft abusing its position as an oligopolist, not a monopolist. A small number of operating systems dominates the market: Microsoft Windows, Apple OS, Ubuntu Linux, and a few others. Microsoft is not the only game in town. They are not preventing other organizations from building their own operating systems.

So the crucial question remains: Is Windows a bad product if Microsoft is a bad corporation? But is Microsoft a bad corporation? No. The simple truth is that Microsoft intends to reduce its costs to a point where they can no longer spend any less - Just like ever other business, Microsoft strives for its efficient point. The people who run Microsoft will do whatever they think will make them the most money for the least cost. To Microsoft, this means the addition of restrictions and exclusivity - all in the name of profit. Microsoft isn't out to hurt the consumer and sing praises to the RIAA. Rather, I blame this on stupidity. Microsoft is afraid of lawyers. Just look at the Zune: If Microsoft enabled song sharing, the Zune would be technologically superior to the iPod, and it would have launched with a bang. But afraid of the RIAA and its member organizations, one of the most powerful companies in the world folded to a media distribution company, Universal.

It sounds like Microsoft doesn't care about the users, right? As long as management signs the OEM deals, nothing else matters, right? Wrong. Like every other software company, Microsoft has to convince you that Microsoft software is the best. There are two reasons for this: First, Microsoft knows that if it doesn't update its operating system, customers can and will move to one that does. Second, Microsoft, like every other software company, makes money when its product sells. Updating the product is an incentive to buy new versions.

I'm not excusing Microsoft for it's "embrace, extend, and extinguish" policy, nor for its shady influence on other companies. Microsoft is only as honest as the people that run it; a downside of corporations is that they give unscrupulous people a shield, since corporations are regarded as persons in the eyes of United States law.

I'm not going to get into whether or not Linux is actually better than a commercial product due to its non-commercial nature. I wrote this essay, because arguing that corporations are evil is just silly. I recognize the consumerist attitude that makes up modern America, but it's not inherently evil. Most Americans (and citizens of much of the rest of the world) want to make a lot of money, and for some people, that means running a business. Corporations don't love you, but they don't hate you either. It's important to remember that corporations are made up of people.

1 comment:

Buddy said...

I just wanted to applaud you and this blog. Even though I don't always agree with you - or even nessecarily understand what you're talking about - I still love reading this blog. It meets the four I's of blog writing: Insightful, informative, and interesting, and intertaining.

Keep it up!