Free enterprise is truly wondrous. Google’s intense competition with Microsoft impelled revolutionary changes to office suites. Microsoft Office, used by 90% of enterprises, is the world’s most popular office suite and generates over half of Microsoft’s profit. Office 2007 featured an amazing new graphical user interface as well as several new features and capabilities. Despite Microsoft’s advancements, it overlooked one very important feature, cloud-computing.
Google spotted Office’s deficiency and provided consumers with a vastly different alternative. Google docs features word processing and spreadsheet software that has been stripped to the core but can be accessed and edited by multiple users from any internet connection. Even users who still greatly prefer Office 2007′s features and far superior power have found Google docs indispensable for many collaborative efforts. For 4 years, Google’s free product has been stealing market share from Microsoft. This market mechanism not only showed Microsoft that consumers had a need that wasn’t being met but also provided developers with a solution.
Google solved a problem Microsoft didn’t even seem to know it had. Now Microsoft has used the insight provided by Google’s success to improve upon Office 2007 with Office 2010. Sales of Office 2010 begin Wednesday in New York but Microsoft plans to offer Office Web Apps in June when it starts selling Office 2010 nation wide. Office Web Apps is to be an advertisement-supported free, internet-based version that, like Google docs, lacks several features. Office 2010 users still will not have their documents and email in one interface unless they are still using Outlook (surely no one is since Jeff Tucker explained its evils), a problem not faced by Google docs users.
How can anyone doubt that a market in which all players are free to use their resources as they see fit is a catalyst for advancement? Markets do not reward arbitrary advancement; only advancements that make consumers better off are supported in a free-market. Microsoft could certainly have made many other advancements, in a technical sense, to its product but the market was able to show it which advancements created value and were worth the requisite capital expenditure. Such a thing is almost impossible for central planners, even tecnhocrats. For years, Microsoft has been forced to fight government efforts to hamper its operations. Some version of MS Office is installed on 80% of computers world wide, used by 90% of enterprises and accounts for $12 billion out of Microsoft’s $20 billion annual profit. Clearly MS Office dominates the market, some would even call it a monopoly, yet competition was not only able to help Microsoft improve its product but also forced it to give away a free version! Murray Rothbard explained in Man, Economy & State:
“[I]f a firm, through greater efficiency, does obtain a “monopoly” in some sense in its industry, it clearly does so . . . by lowering prices and benefiting the consumers. And if (as all the theorists who attack “monopoly” agree) what is wrong with “monopoly” is precisely a restriction of production and a rise in price, there is obviously nothing wrong with a “monopoly” achieved by pursuing the directly opposite path.”
Thus there is no need for governments to attack companies based upon some notion of protecting consumers from monopolists. When companies are forced to expend capital to defend against government attacks, they are wasting resources that could otherwise be used to better satisfy consumers. Government monopolies (US Postal Service) and government granted monopolies (Federal Reserve & many utility companies) truly are dangerous and often harmful to consumers because their monopoly is not threatened by market competition.