Michigan Attorney General Frank Kelley recently joined 19 other states in suing software giant Microsoft. The companys crime? Selling popular products at prices too low, or giving them away for free.
Microsoft gives away its Internet Web browser to get customers to try it. Kelley wants that stopped because he fears Microsoft will take over the market, force others out of business, and kill competition. Kelley knows that competition leads to lower costs and higher quality for consumers. But instead of suing to increase competition, he should take a lesson from Dow Chemical Company founder Herbert Dow.
In 1904, a giant German chemical cartel tried to drive the tiny Dow out of business by flooding Dows market with bromine priced well below the cost of making it. Instead of caving in, Dow bought up the cheap bromine by the truckload, repackaged it, and resold it in Germany at a handsome profit. The confused Germans eventually had to surrender to free market competition.
There is every reason to believe that a modern-day competitor will surprise everyone by outsmarting Microsoft, and like Dow, do it without the force of government. As in all good competition, consumers will be the winners.
For the Mackinac Center, this is Catherine Martin.