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Source link: http://archive.mises.org/17366/apple-vs-microsoft-which-benefits-more-from-intellectual-property/

Apple vs. Microsoft: Which Benefits more from Intellectual Property?

June 21, 2011 by

In a recent email discussion with some fellow libertarians, including Sheldon Richman, Tennyson McCalla, Kevin Carson, and others, the issue arose as to how much Microsoft and Apple have benefited from and are dependent on intellectual property for their business model and success. The issue with Microsoft arose when libertarian and IP opponent Tom Palmer, ((See Palmer’s “Intellectual Property: A Non-Posnerian Law and Economics Approach”Download PDF and “Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects”Download PDF.)) in a recent Atlas Foundation video on The Morality of Profit, held out Bill Gates as an example to illustrate the morality of profit. As Richman wrote:

Some people who applaud the principle discussed in the Atlas video nevertheless think that Bill Gates is a poor example for illustrating the morality of profit because his fortune hinges on “intellectual property” and he uses IP laws to throttle competitors. Here’s a very good video response.

The Palmer video, and the response by one Nielsio, follow:

I agree with Sheldon and my other discussants that Gates is a bad example to use here since, as I wrote in Against Intellectual Property (first published in 2001), Bill Gates’s “fortune has largely been built based on the government-granted monopoly inherent in copyright.” (n. 29) As François-René Rideau notes,

Microsoft has always lived on a particular kind of Government-granted privilege called “Intellectual Property”. Consider in the early history of Microsoft the article that first made Bill Gates famous, An Open Letter to Hobbyists, published in February 1976 to threaten with prosecution people who were freely exchanging copies of Microsoft BASIC. Since the beginning, Microsoft claims a right to revenue not just from services it actually renders, but from those it prevents competitors from rendering. According to their argument, people should not copy, use, modify, enhance, adapt or redistribute software upon which Microsoft lays a claim of “Intellectual Property”, without acquiring a “license” by paying a tribute to Microsoft at Microsoft’s conditions. [Rideau, Government and Microsoft: A Libertarian View on Monopolies]

On his Facebook repost of the video, Palmer defended his choice:

I don’t think that IP is really so economically significant, outside of chemical and pharmaceutical industries. Much protection of ideal objects in software comes from quality control, freedom from viruses, upgrades, toll-free service numbers, etc. I do not consider Gates’s fortune to be even remotely similar to the fortunes of, say, lobbyists for government subsidies, producers of negative pollution externalities, etc. ((Here Palmer implies Gates’s fortune is not due to IP, because “I don’t think that IP is really so economically significant, outside of chemical and pharmaceutical industries.” I think he’s mixing things together here. The argument among some IP skeptics is that most patents are not necessary, other than for chemical and pharmaceutical patents. But Microsoft’s fortune has rested on copyright, not patent. Further, even if only chemical and pharma patents are “necessary,” it does not mean that other types of patents, or other types of IP (such as copyright), are “not economically significant.” Lots of patents outside chemical and pharmaceutical areas are economically significant, of course, even if you can’t argue they are “necessary” by utilitarian standards. Microsoft just lost a $300M case to i4i outside these areas (see Supreme Court Keeps High Standard for Invalidating Patents). And of course copyright is “economically significant”–to Microsoft and Bill Gates.))

Now I agree that Gates and Microsoft are not as bad as lobbyists for government subsidies, and Microsoft does provide valuable services. It’s just that the price is wildly inflated due to copyright. On the free market there would be no copyright monopoly. And thus Microsoft would not have the monopoly it does in operating systems, and it would not be able to charge monopoly prices.

And Gates is also a hypocrite: his company depends on copyright (witness the aforementioned An Open Letter to Hobbyists), yet he has railed against patents, when they posed a threat to Microsoft (see my post Bill Gates’ 1991 Comments on Patents). As Richman said in our discussion, “As to the importance of IP to Microsoft: Would Gates push the button and abolish it if he could? I suspect not.”

Worse, now Microsoft is acquiring a dominant patent position by leveraging its copyright-gained monopoly profits (see my post Microsoft Copyrights –> Patent Dominance). And Microsoft has the chutzpah to object to Google’s acquisition of 6000 Nortel patents because then Google would be able to defend itself from a patent attack by Microsoft. Microsoft is clearly schizo on the patent issue: first criticizing them (while going after copyright infringers); then acquiring a patent arsenal using copyright profits; then objecting to others’ acquiring patent portfolios that might immunize them from a patent attack by Microsoft; in the meantime losing a $300M patent suit to i4i and arguing that patents should be slightly weakened (see Supreme Court Keeps High Standard for Invalidating Patents).

In any case, even though Microsoft does provide useful services, Gates is still a bad example to use in a video about the morality of profit on the free market.

But here the agreement among the discussants ended, when we turned our focus to Apple, in response to a recent blog post by Lew Rockwell:

Proper Patriotism

Posted by Lew Rockwell on June 9, 2011 09:06 AM

I love the voluntary Apple Nation and our president, Steve Jobs. How much value has this great entrepreneur created for mankind? And look at the new Apple headquarters, and the way he handles some local demands! And note, to all those who write me when I praise Jobs and Apple, telling me I can’t like them because of IP, don’t bother. As a Rothbardian, I oppose government patents and copyrights. But even in a mixed economy–maybe especially–there are heroes of commerce, and Steve Jobs is one of the greatest.

Now I agreed with Lew, and not, I hope, because I’m both an Apple and Lew Rockwell fanboi. My argument was that Apple and Microsoft are different. I am not saying Apple is lily-white; what company today is? I am not saying Apple does not use IP and has not benefitted from it. In the case of Microsoft it seems clear that the great bulk of its profits, and its market dominance, and its business model, are heavily dependent on copyright (and, increasingly, patent). But my view is that this is not true for Apple. If you get rid of IP, Apple’s model would no doubt change somewhat, but I see no reason that its basic business model could not continue, or that its success would not continue. It would lose some IP leverage, but then it would also be freed up in many ways too. I think for Apple, it would be roughly a wash. For Microsoft, the loss of IP would be a huge blow. Absence of IP would force Apple to be a bit more standardized and open, and maybe more competitive, but who knows. It could still design and sell premium products at a high price and high profit margin, similar in some ways to how luxury car makers like Mercedes prosper in a world with Toyotas and Fords. Think of it like this: IP law provides, say, 75% of Microsoft’s profits, and maybe 10% of Apple’s (of course, this is not scientific or rigorous, just a guess; such are the perils of counterfactual analysis).

Kevin Carson agrees that Microsoft benefits more from IP than Apple does, but thinks it’s significant for both companies. Sheldon, by contrast, thought that “Apple’s closed architecture in all its products suggests it has benefited more” from IP than Microsoft has. I don’t see this. As I responded:

Microsoft can charge a lot more for software because IP outlaws copies of it, and a lot of competition.

But Apple could sell more expensive, up-brand hardware, wihtout patents or copyright, just as Mercedes sells luxury cars now. They basically give their Mac OS software away now, to lure people to their hardware. I don’t see that you need IP to have their kind of products. Sure, they would be unable to stop knockoff competitors who sell cheaper “Apple-like” hardware that runs the Apple OS, but that is true now of Mercedes, and it still rocks along–sometimes you want a real Mercedes not a fancy Buick for half the price. Same reason people buy a Chanel watch for $15k even though it looks similar to a $100 watch from some less prestigious source. I think Apple would be more innovative and responsive to customers if it faced such competition, but it seems to me they could still prosper with their OS and hardware and related products that interoperate well with each other, by just having high quality products.

But it is hard to say. I think Jobs is worth $5B and Gates maybe 10-15 times that. Maybe Gates would be worth 1/10 what Jobs is worth on the free market.

Tennyson McCalla responded:

I agree with that. Microsoft is a software company, Apple is a hardware company with software to match. I imagine that in a world without IP protections that after Gates sold a few hundred or a few thousand copies of his Windows OS that would’ve been the end of his income from that business. Copies of Windows would be freely traded among people who wanted to use it. Microsoft would’ve had to rely on customer service and constant innovation in order to continue making it as a viable organization. Instead they were able to get by on lock-in/lock-out after they made a big splash in the market.

Apple on the other hand has transformed themselves into a hardware company that sells on style and ease of use. The concept that they promote is “hand in glove,” the software and hardware made by the same people. With a limitation on the varieties of hardware that they offer they vastly cut down on the amount of support that they have to perform (and they consistently come out on top for customer service in annual surveys). Some people find the ease of use and reliability of Apple’s model to be more than worth the cost of not having the latest and greatest CPUs, GPUs, and RAM. Besides, their trend setting hardware designs are esthetically pleasing and maturely subtle.
Even if other people got a hold of their software in an IP free world, their “hand in glove” model would almost certainly still work out for them. Perhaps even better. I’m an Apple booster, so I might be biased.

My reply:

Not only did copyright help them make a big splash, it helped them establish a dominant monopoly, thus forcing people to use their software (at inflated prices) to have a computer. IP also causes a proliferation of non-interoperable standards, so that a Canon laser cartridge doesn’t work with HP, and so on, so that there is a tendency for some firm to dominate (see my discussion of Printer Cartridge Patents in my post Leveraging IP). I think absent IP you would have more interoperability–and thus more competition: so Microsoft (and Apple too) would have to continually innovate to prove their worth to customers.

As for how Apple’s hand-in-glove approach might work even better for them in an IP free world, Apple’s suit against Samsung for copying how the iPhone “looks” (see Apple: Patent Crybaby; Apple sues Samsung over Galaxy products) shows that they at least think IP is important even to hardware sales–I just think they are wrong. It helps, but is not critical to their business model. I think with Samsung competing and making iPhone-like devices, Apple can still prosper, but it’s a bit more difficult. So the iPhone case may be a bit more similar to Microsoft/software, but the Macs are less so, and Apple’s ecosystem approach could help offset competition for particular products. (But even with computers, Apple has used IP–my first computer in 1984 or so was a Franklin Ace, an Apple II+ clone (with C/PM dual boot). And Apple sued and got them shut down. Absent IP they could not do this, but still, I think Apple could do fine just as Mercedes does now.

Still, we should not minimize Apple’s use of IP. As Rideau noted to me in a Facebook discussion, “Apple certainly uses and abuses patents and copyrights. It famously sued many makers of compatible computers, sued and failed to monopolize windowing systems for personal computers, sues anyone trying to copy their software, holds patents on all kinds of things including their power connectors, and generates large revenues out of the outlawing of music and video copying.”

Tennyson:

Yes to all of that.

I feel like Apple sees themselves as being in the position that Microsoft was in when they began their meteoric rise. They’re making absurd suits to protect their inchoate position of dominance, rather than out innovate their competitors. It seems things have gotten to a point where they have so much clout that they were able to leverage Nokia into accepting an oligopoly position (the recent licensing issue). [Note from SK: see my post Patent Cross-Licensing Creates Barriers to Entry.]
The trouble with Samsung might end that same way, but we’ll see what Samsung does in the next few quarters. Apple is determined to take advantage of the fact that their iOS devices are going to become independent entities soon. At that point Apple may begin to treat the iPhone, iPad, iPod touch, AppleTV, and perhaps the updated Time Capsule, the same way that they treat the Mac OS devices, which would mean a fight for innovation more than a fight for IP.

I’m also a bit worried about the direction that Mac OS devices are taking though. If Apple really goes whole hog into the iOSification of the Mac then the openness of all of their devices might be in jeopardy. Apple will see the simplicity of unified development platforms as a big plus. Not only as a chance to cut down on internal team numbers, but to shoot up the number of Mac OS developers as well. It’s going to be an interesting few years.

Kevin Carson argued that without patents it would be easy to knockoff Apple’s hardware and undercut the patent premium and thus seriously cut into Apple’s and Jobs’s billions.

Tennyson’s reply to this:

I don’t think this is certain at all.

I feel like the paradigmatic model for an industry without IP is the fashion industry. Sure, there are knockoffs of the stuff that big producers make, but reputation and primacy make the moulds.
This would be Apple’s thing. Consumers might look at knock-offs like people who flatter but aren’t to be considered as in the same league. Prices would be lower all around, but Apple could charge a premium.

In a free society it’s true that high prices would tend to attract competition that would wear the high prices down, but higher prices are still going to arise occasionally when things are new and are highly anticipated.

Me:

I don’t think the fashion model is an exact parallel either. The fashion case goes by cachet, prestige, etc. That is less the case for computers, which are functional devices, though it plays a part. I think mostly though people pay a premium for Apple–say, a 100% premium, roughly double–because of perceived qualitative differences: better OS, the ecosystem, elegance, aesthetic design, reliability, whatever. That is not easy to duplicate with a knockoff–so it seems to me.

My friend Rob Wicks, commenting on this issue to me, wrote:

I’m starting to see your point about Apple’s comparative benefit regarding IP. Microsoft benefits from IP far more than Apple. I think the main IP that Apple really extracts benefit from is trademark law. But everyone does that. In a world without IP, you’d probably have a bunch of relatively crappy knockoffs and Apple. It would be like the clothing industry, but with more demonstrable benefits in going with the genuine article. After all, there are cases where lower priced goods actually deliver the same or even better quality than higher priced ones when it comes to fitness for clothing and such, but I think Apple would actually make computers which lasted longer and worked better than any of the knockoff folk could manage, just like a Geely GE is nothing compared to a Rolls Royce Phantom.

Bottom line: in my view, Microsoft’s success and Bill Gates’s fortune is largely a creature of copyright; while Apple’s success is not nearly as dependent on either patent or copyright.

Let me emphasize that my purpose here has not primarily been to argue that left-libertarian IP abolitionists are wrong about Apple and IP, but rather to explore the fascinating and difficult issue of analyzing the real world effect of IP law–it’s insidious and significant, but counterfactual analysis is difficult.

Update: See also David Veksler, Apple’s suit against HTC pits patents against innovation; Jeff Tucker, Apple the Monopolist.

[c4sif]

{ 70 comments }

Aparicio June 21, 2011 at 8:33 am

I said the same when I saw Tom´s video, and I was the first too comment on it when he published it on Facebook. Nobody seemed to notice. I want my copyrights. Hahaha. Completely agree with the post, and I am also an Apple fan.

Paul June 21, 2011 at 8:51 am

I don’t know…granted that Microsoft has largely made its profits with copyright in the past, that doesn’t necessarily imply that it could not adapt in the future. I think Microsoft has some very adaptive elements within it. Look at how it expanded into the video gaming industry. The original Xbox was a huge flop, but within a few years they had become the unquestioned dominant player in the serious gaming market. I personally think Macs are overrated and overpriced and typically contain about half the processing power and memory space as an average PC, but that’s just me.

Stephan Kinsella June 21, 2011 at 9:13 am

I think MS could adapt, but the point is its business model would have to change radically. Not so for Apple, I think.

As for the relative merits of the actual products, that’s really irrelevant here.

nate-m June 21, 2011 at 10:14 am

Microsoft could adapt in a ‘ok’ manner.

Microsoft major sales drivers are going to be Windows, Enterprise Services/Apps, Office, and then they are slowly clawing their way along with home hardware with Xbox and a few other things.

Xbox would make sense because it’s hardware, but I think that Microsoft depends on licensing subsidies and services provided over the Xbox network. Most of that depends on DRM and copyrights, but DRM is not commercially viable without DMCA backing it up. The xbox sales are effectively subsidized by these laws.

They would lose the majority of Office sales. This is extremely lucrative. Especially when you consider the special ‘locked in’ type licensing deals that Microsoft uses with educational, corporate, and government institutions. How those work is that they are effectively slashing the costs of licensing their software in exchange for a steady revenue stream. To keep their steep discounts these institutions are required to continuously buy into Microsoft’s copyright (and to a lesser extent patent) licensing schemes, otherwise they face stiff ‘fines’ in the form of licensing prices hikes.

They would lose most of that.

That leaves Microsoft’s enterprise market software and services. Exchange, Active Directory, Windows Server, Development tools, application stacks, database software, etc.

This would still be profitable for them. Large enterprises are willing to pay massive amounts of money to ensure that their IT infrastructure works correctly. Copyights do not even enter into the picture really.

They would have to behave like Redhat, which is a software company that doesn’t depend on copyrights (at least not even close to the same extent. They give away all their source code for free at http://ftp.redhat.com for almost all their products)

They would continue to retain control of the source code and provide enterprise support and services to other companies.

They would still see large losses, however. At least for a while. They’d go from making tens of billions of dollars to hundreds of millions.

Now Apple would see a significant loss in revenue for it’s ‘newer’ services like iTunes and their App store. The DRM on their phones and ipods would be quickly neutralized.

Maybe they would lose half of their profits?

I know people like to go on and on about Apple vs Microsoft, but it’s really just marketing with very little substance. They both have their own markets and there is actually very little overlap. The only place they are really competing at this time is over smartphones.

(Hint: Microsoft is Apple’s #1 software vendor)

Stephan Kinsella June 21, 2011 at 10:28 am

I think they would lose more than half, b/c I don’t think Xbox etc. is nearly on the order of magnitude of OS and Office sales. (but I’m not sure)

The big hit would come because, as I noted above: “Not only did copyright help them make a big splash, it helped them establish a dominant monopoly, thus forcing people to use their software (at inflated prices) to have a computer. IP also causes a proliferation of non-interoperable standards, so that a Canon laser cartridge doesn’t work with HP, and so on, so that there is a tendency for some firm to dominate (see my discussion of Printer Cartridge Patents in my post Leveraging IP). I think absent IP you would have more interoperability–and thus more competition: so Microsoft (and Apple too) would have to continually innovate to prove their worth to customers.”

In other words, there would be other Windows OS and Office type vendors, so that MS would not have a lock on those markets; they would effectively be open source. That means they are competing against dozens of other Windows OS/Office sellers, and would simply not be dominant or have a monopoly. So, they would have only a slice of the Windows market–say, 15%, not 100%–AND they could not charge as much.

nate-m June 21, 2011 at 10:38 am

I meant to say that Apple would lose half.
I guesstimated that Microsoft would go from tens of billions to hundreds of millions dollar company… which would be 90-95% loss.

I am guessing that because even giving their source code away for free Redhat is able to pull in about a 100 million in net income over a year. Microsoft would still be able to make more then that because of their industry relationships and much larger market share.

Without copyrights your customer end up paying for expertise, support, and services rather then licenses so much. For consumer this doesn’t matter, but for institutions it’s important.

Paul June 21, 2011 at 1:27 pm

True. And I agree with your basic outline. I just wanted to throw in my two cents that I think Microsoft does have strengths as a company even if it does soak itself in IP.

Windows Hater June 21, 2011 at 4:56 pm

Microsoft ? Adapt ?

I want an operating system that works and does not get in my way. Simple, fast, cheap, efficient.

Now, I’m running linux out of a 4GB USB key ! It boots up way faster than vista on my hard drive.

Vista crashed anyways and I got rid of the hard drive. Never again will I use Microsoft products. Microsoft is way too buggy, bloated and busy trying to force it’s values down my throat. Microsoft is not my agent, Microsoft is not it’s customer’s agent.

My Linux works great and I can do whatever I want with it. I still have my windows XP and I will install it on a bootable USB key so I can do my Autocad drawings. I own an old Autocad 2000 program that still works great and does what I want but will not work on Vista.

For me, Microsoft is finished. That company is too obsessed by graphics, visuals, “features” that get into your way, user account control and other “features” that prevent you from doing what you want. Digital Rights Management etc.

Microsoft is an evil company that wants to takeover your computer life. You no longer have property rights on your own computer. You do what Microsoft tells you. Well, I’m fedup with that.

From now on, I’m with Linux. And I plan to keep my windows XP for a long long time because I do freelasnce technical drawing for a living and my software only works with XP.

Microsoft has lost me as a customer for ever because of the inferiority of their products. There is no way they can “adapt” to make me want to go back with them.

Windows Hater June 21, 2011 at 5:01 pm

I miss the good old days when Microsoft was a humble company that did not do evil and where Steve Ballmer had to clown around on TV to try and convince people to buy his compact and to the point operating system.

Back in the good old days, Microsoft did not force itself on your machine, you would go to computer stores and decide which operating system you want. IBM, Unix, Linux etc.

Windows was not attempting all the time to stop you from doing what you wanted, it did what you told it even if it was a mistake. There was DOS and text interface if you needed it. There were lot less viruses and the internet was not bothering you with popups, flash ads and other annoyances that plagues your computing experience.

As far as I’m concerned, Microsoft is dead, it has outlived it’s usefulness and it is going down the drain for good. New operating systems and hardwares that WORK, that are FAST and that DO WHAT YOU WANT are coming and Microsoft will get the shaft it deserves.

Shirley Knott June 21, 2011 at 9:30 am

There is also the fact that Microsoft has been one of the, if not the, major drivers behind the shift to viewing software sales as sales of a license to use.
And it did this through a combination of marketing to government agencies and lobbying governmental bodies for favorable legislation.
There was a time when software was treated much more like books, with stronger legal remedies for faults and failures, which MS has gone a very long way to undercut, all through legislative action.

no hugs for thugs,
Shirley Knott

scineram June 21, 2011 at 9:56 am

The attack Mircosoft for its copyright can be defused by a little estoppel argument.

- without copyright Microsoft software would probably not exist
- no one is forced to use its software if they don’t want to
- therefore one cannot complain about having to pay Microsoft for its service.

Stephan Kinsella June 21, 2011 at 11:32 am

“without copyright Microsoft software would probably not exist” nonsense.

anon June 22, 2011 at 7:07 am

Brilliant.

End of argument…

Per L Bylund June 21, 2011 at 10:34 am

As a former programmer and systems developer I definitely agree with Sheldon on Apple’s reliance on IP. They are usually the most vicious protectors of IP whereas, as you state yourself, Microsoft is pretty schizo (and, therefore, unpredictable in that they do not always defend property rights). The fact that Apple has a very closed model, which means if you get one Apple product (be it iPod, iPad, iPhone, iTunes, whatever) you need to get other Apple products to make it work well, means they are relying completely on the first Apple products people get to be protected by government privilege. It is a common myth that Apple are somehow the good guys, but in terms of IP they are definitely not. They sue people and competitors left and right.

I also disagree with the statement that Microsoft would lose more without IP privileges. This is, to me, a completely false statement. The fact that Microsoft uses a very open platform (despite what politicians and Apple lobbyists say), which is compatible with most other platforms – hell, their development support is even language independent! – shows they have faith in their products. They do protect e.g. Windows source code (which the EU demanded they give to their competitors!), but that is not necessarily an IP issue – source code is not the same as the compiled versions you get when you buy the software. So while Microsoft claims legal IP privilege in terms of protecting their source code, I don’t see how this is at all based on IP privilege – it is a defense against the usurpation of governments attempting to steal their *source code* (not specifications – the *code*) to give to Microsoft’s competitors. (Of course, Microsoft relies on IP in other matters, but it is important to distinguish between the two.)

Rather than privilege-based, Windows is made to have hundreds (if not thousands) of open application programming interfaces (APIs) so that *anyone* can develop software for the Windows platform – and sell it. At no charge! Microsoft even has an extensive program of private “licensing” for products that are guaranteed to work with Windows and other Microsoft products. Compare this to Apple’s “use only our stuff or go to hell” model. I find Microsoft’s model to be much more plausible to be profitable in a non-IP/freed market.

Furthermore, Microsoft is one of the leading corporations in software development and the overall IT industry developing standards that are frequently submitted – free of charge – to private industry standardization organizations. There are many examples of this (including standards for SOAP and XPS) – and Microsoft benefits only because they have a first mover advantage (since they developed the, possibly accepted, standard). Again, this is not business based on IP privilege – it is open competition *without* any requests to IP. And again, Apple does nothing of this sort – they sit on their stuff and sue people getting anywhere close to producing similar products.

So I wholeheartedly agree with Sheldon’s assessment: Microsoft would do better without IP than Apple would.

Stephan Kinsella June 21, 2011 at 11:34 am

I’m not persuaded, but interesting argument! Check out the Rideau article I linked to for more extensive arguments on how MS benefits from IP.

Per L Bylund June 21, 2011 at 12:09 pm

Stephan, the difference is all in the product strategy. People tend to compare Apple and Microsoft as though they supply the same product – but they do not. Microsoft primarily develops software for professionals and business, which means their emphasis is on backend and backoffice software. Microsoft is unbeatable in terms of support for developers of third-party software, which is why they have been so successful for so long. This support exists in both consulting, knowledge bases, numerous certifications of developers’ qualifications, and in free (yes, free) software development suites including support for open standards.

Apple, on the other hand, is all about consumer products. This is a very different market and they have a very different strategy. Perhaps the consumer market is more open for lock-in effects, but businesses certainly are not – they want high productivity, customer support, and integrated (or integration-allowing) solutions that support their business processes. Microsoft does just that. This is why Microsoft software is often more expensive – all their applications include extensive support for development of e.g. firm-specific software within/using the Office package etc. I’ve developed numerous applications using the Microsoft platform; I know what I’m talking about.

And the funny thing is that while Apple does everything to make it really difficult for fanbois not to buy absolutely everything with a fruit on the front (because otherwise it is impossible to get the gadgets to work together), Microsoft does the exact opposite. The new Office format (the docx, xlsx, etc.) is a great example: all office documents are (since the 2003 version) based in the open and widely supported XML standard. It is not a closed or legally protected standard – it is readable basically by anyone, and can be used by any application after minor changes!

As for whether this is convincing or not, I couldn’t care less. Most people think they “know” that Microsoft is an evil company that charges shameless prices for software that doesn’t always work. Well, let me tell you: it is darn easy to develop software on closed platforms that nobody can ever tweak no matter what. But it is really hard to develop software that always functions great while offering extensive support for third-party software and that predicts all possible uses of such third-party software while not letting bugs emerge somewhere in the interaction. Are there bugs in Microsoft products? Yes – and especially when third-party solutions are installed. But Microsoft products are extremely flexible compared the Apple stuff. Are there bugs in Apple software? Yes, but that is actually inexcusable in closed systems with limited functionality.

Funny observation: Google seems to attempt to take over the market in-between Microsoft and Apple while competing with both. They offer semi-open and third-party-supportive solutions for consumers that have some limited support for businesses (like Google Docs). We’ll see what model ends up most successful in the market, but as someone who has seen what is behind the design (which is what most people only see) I am very impressed with Microsoft’s accomplishments. (Despite their occasional support for and use of the IP madness.)

Stephan Kinsella June 21, 2011 at 1:48 pm

Per,

Stephan, the difference is all in the product strategy. People tend to compare Apple and Microsoft as though they supply the same product – but they do not.

I am not comparing them in this respect.

As for whether this is convincing or not, I couldn’t care less.

I am not sure what I said to offend you. I’m not invested in either view and not passionate about my conclusion–I am aware of the limits of knowledge here, in the context of counterfactuals. None of us know for sure what would happen to Apple or MS absent IP. We can only guess. Your guesses are reasaonable.

Most people think they “know” that Microsoft is an evil company that charges shameless prices for software that doesn’t always work.

That is not the argument being made here.

Well, let me tell you: it is darn easy to develop software on closed platforms that nobody can ever tweak no matter what. But it is really hard to develop software that always functions great while offering extensive support for third-party software and that predicts all possible uses of such third-party software while not letting bugs emerge somewhere in the interaction. Are there bugs in Microsoft products? Yes – and especially when third-party solutions are installed. But Microsoft products are extremely flexible compared the Apple stuff. Are there bugs in Apple software? Yes, but that is actually inexcusable in closed systems with limited functionality.

The arguments above are not about personal preferences as to Apple or MS, but about which one is more of a free market company, which one is more dependent in its business model on IP. It really has nothing to do with personal preferences as to what kind of computer you like better.

Per L Bylund June 21, 2011 at 1:57 pm

Stephan,
You did not offend me, but you claimed that the comment I made on my own experience was both interesting and not convincing, which I find confusing. Interesting, fine, but what does it mean that my experience as a systems developer is not convincing? That you are not convinced that I have this experience? That it is not my experience? That it is not, in terms of fact, correct? That you know something I don’t? “Convincing” is a strange word here, I think, and especially together with “interesting”. That is all I meant. I meant no offense and didn’t take offense.

You are right about the counterfactual nature of this discussion, which to me suggests that we need to know as much as possible about these two companies in order to tease out what is actually going on. I found the debate in the blog post interesting, but (as you said) not convincing. There has been only one purpose with my comments: to share my multiple-year experience of Apple’s and Microsoft’s products from the non-consumer perspective. I think it is very relevant to the discussion.

Stephan Kinsella June 21, 2011 at 2:18 pm

You did not offend me, but you claimed that the comment I made on my own experience was both interesting and not convincing, which I find confusing. Interesting, fine, but what does it mean that my experience as a systems developer is not convincing? That you are not convinced that I have this experience? That it is not my experience? That it is not, in terms of fact, correct? That you know something I don’t? “Convincing” is a strange word here, I think, and especially together with “interesting”. That is all I meant. I meant no offense and didn’t take offense.

Your argument that Apple benefits more from IP than MS–you know, the point of the post? That is what did not persuade me.

There has been only one purpose with my comments: to share my multiple-year experience of Apple’s and Microsoft’s products from the non-consumer perspective. I think it is very relevant to the discussion.

I am glad you did; that was one purpose of the post, to get people to consider this and offer their insights. Even if they do not persuade.

Dave June 21, 2011 at 11:09 am

Stephan,

It’s surprising to me that you and your colleagues are Apple “fanbois”‘ given their monopolistic practices, especially related to the iPhone and iOS. Some examples from recent memory:

1. Apple’s suing of Android OEM’s as a barrier to entry into the mobile phone market.
2. Apple’s strict policing of its App Store, disallowing developers to “duplicate functionality” or its own products.
3. Apple’s attempts to ban “Jailbreaking” and prosecute those that help others do it in an attempt to enforce (2).
4. Apple’s rejection of an app on questionable grounds and then implementing the same exact app. (http://www.theregister.co.uk/2011/06/08/apple_copies_rejected_app/)

Admittedly, not all of these examples are strictly patent- or copyright-related. But they are inarguably rent-seeking monopolist behavior that I have a hard time supporting, and a hard time understanding why a group of smart libertarians can support.

Sure, Apple innovates and creates great products. But they also use monopolistic and anti-competitive practices to obtain higher rent from those products. I’d like to see it stop.

Cheers,

Dave

Stephan Kinsella June 21, 2011 at 11:33 am

I’m a fanboi b/c I love their products, and I think Jobs is a genius. I think they are good *despite* their use of IP (like all other companies). I think they would be better (better for me and consumers, anyway) without IP. But they are still great now. Despite their “flaws.”

DixieFlatline June 21, 2011 at 11:35 am

Is using statist privilege a flaw or immoral?

nate-m June 21, 2011 at 1:03 pm

False dichotomy.

The system is immoral and is something that Apple/Microsoft was born into. They did not create the legal situation in which they exist. They are partially responsible for taking advantage of the situation for profit, but only partially. As authors on this blog tries to points out a immoral system has a strong influence on the behavior of people that are subjected to that system.

Behaving in your own self interest is no more or less immoral in a state-run economy then a free economy.

DixieFlatline June 21, 2011 at 3:11 pm

nate, are you saying that if I act in my own best interest, it doesn’t matter if I steal or not, or are you saying that morality is a nonsense concept?

nate-m June 21, 2011 at 11:37 pm

I am saying that it’s not a simple issue and trying to force the issue into a either/or situation to judge these companies is intellectually dishonest, lazy, and counter productive.

I don’t particularly care for either company really. The only really bad things they do is use their profits to petition the government for more privileges and they should be ashamed for that They also use the legal system to attack other companies and protect their markets and they should be condemned for that.

The best thing you can do is make sure that they don’t get your money. Don’t use their software, do not use their hardware.

Stephan Kinsella June 22, 2011 at 7:18 am

So, the problem is that if Apple (say) did not acquire and even use its patents offensively, this is not in the interest of the shareholders. Suppose the board decided on libertarian grounds not to sue someone for patent infringement that they could extract $100M from. Then this is a waste of the shareholders’ resources; it’s a violation of fidiciary duty, and could lead to termination and liability for the directors. You just can’t substitute your pet political preferences for the pecuniary interests of your shareholders.

This is the problem with having a corporatist state: it makes it almost impossible for a pure comapny to rise to the top. Even if one person owned a company 100% and thus had the right to refuse to, say, use patents in the normal way, this puts them at a competitive disadvantage with respect to others, so we can expect that most companies that emerge and prosper will be those with few ethical qualms about using the existing rules. That is why it is important to change the existing rules.

But I do think there is no excuse for lobbying the state for more rules. Further, I have in my mind that somewhat along the lines of Google’s slogan “don’t be evil”, you start a company with the express company policy that it will never use the state courts *aggressively* against other companies, but that it will use them defensively. So this way shareholders who buy shares know what the policy is so they cannot blame managmenet and directors for not suing someone for patent infringement. Then you announce to all your customers and competitors that you will never sue someone for patent infringmenet but you have no qualms about *counter*suing someone who sues you first. So then you would acquire patents like others do, but you would be acquiring them expressly for defensive purposes–and you would let the world know this.

Now that would be a genuinely “don’t be evil” policy, and to be honest, I don’t think it would hurt the company much. Might even give it good will with customers, a good image, good PR, etc. But it is unfortunately essential in today’s world for such companies to acquire patent arsenals for defensive purposes. The problem is that once they have them, they feel obliged to use them offensively when the opportunity arises.

DixieFlatline June 22, 2011 at 1:04 pm

I am saying that it’s not a simple issue and trying to force the issue into a either/or situation to judge these companies is intellectually dishonest, lazy, and counter productive.

It must be nice for you to make factual claims, while denying that it is possible to do so. Ever heard of the law of identity? Which of us is intellectually dishonest now?

Either these companies use the state to hurt others or they don’t. We can’t judge intent, only action. Action indicates preference.

Note, you did not answer my question. You tried to change the argument. Again, that’s the real intellectual dishonesty. When questioned on your claims, you obfuscate and evade. Which is what people have to do when they get called on their bullshit.

nate-m June 22, 2011 at 3:02 pm

Note, you did not answer my question. You tried to change the argument. Again, that’s the real intellectual dishonesty. When questioned on your claims, you obfuscate and evade. Which is what people have to do when they get called on their bullshit.

Your ‘question’ was more of a statement then a question. It’s a ‘either or’ statement.

It’s like me asking:

Are you intentionally a moron or just pretending to be one on the internet?
Are you going to change the subject or actually answer it?

It’s a bullshit question. I didn’t change the subject, I just don’t play your stupid little games.

Stephan Kinsella June 21, 2011 at 1:43 pm

I’m not an expert on personal morals or ethics so can’t say for sure, but my inclination is we have no obligation to be martyrs.

DixieFlatline June 21, 2011 at 3:30 pm

Are you an expert on flaws?

sweatervest June 21, 2011 at 7:38 pm

My take is that doing business with a bank robber is not bank robbery. We should stay focused on who is doing the robbing, not who the benefactors of robbery are. So what if they are benefactors? Am I guilty of something if one of my family members is murdered and I am the heir to his estate (assuming, of course, I didn’t play a role in the murder!)?

Besides, in addition to all my other examples of state privileges we are all invoking by being here at all, we’re all living on land that was stolen from natives by the state. So are any of us in a position to wag our fingers at those that enjoy state privileges?

Anti-IP Libertarian June 22, 2011 at 5:47 am

Your analogy is wrong:1) Those corporations influence the regulations/laws heavily by lobbying.2) Those corporations do not only profit of something without contributing to that somethings situation (eg by finding a stolen good) but they hire the thieves themselves and/or pay the thieves afterwards.

sweatervest June 22, 2011 at 11:39 am

“Those corporations influence the regulations/laws heavily by lobbying”

In other words they ask the people that are robbing them blind for a few favors. I’d like to see how you handle that situation. Whether they influence or not, they are not the source of the aggression. Who isn’t guilty through this reasoning?

“but they hire the thieves themselves and/or pay the thieves afterwards.”

Surely you have some examples of this criminal charge you are launching on these corporations and are not just blowing hot air.

Anti-IP Libertarian June 23, 2011 at 1:02 pm

Do play a fool, please. Just look at how big companies heavily influence the creation and passing of laws.

No, the politicians themselves are not the only ones to blame.

“In other words they ask the people that are robbing them blind for a few favors.”

You are wrong: The do not ask them merely favors, but they ask them to rob OTHERS and share that stolen money.

Just look for all the laws regarding IP, monopolies, subsidies and so on.

We are not speaking about small companies following capitalistic rules but about big corporations which work together with the state in enslaving citizens in multiple ways.

sweatervest June 21, 2011 at 7:32 pm

Did you post that using an internet protocol developed at tax-funded universities? Do you drive on state roads? Do you buy subsidized groceries?

DixieFlatline June 21, 2011 at 11:06 pm

Equivocation is the refuge of scoundrels.

nate-m June 21, 2011 at 11:40 pm

Pointing out hypocrisy is not equivocation..

sweatervest June 22, 2011 at 11:40 am

You don’t know what equivocation is, you’re name-dropping logical fallacies which is a sophistical tactic.

Where did I switch the definition of a word and continue to use it without noting the changed definition?

DixieFlatline June 22, 2011 at 12:55 pm

Where is my hypocrisy? You don’t know me, don’t know where I live, whether I drive or not. You don’t know what I eat or how I earn my money. Libertarians like you are a joke, you live in a dream world where you can justify what you do, but still have the temerity to criticize others, creating an artificial distinction that what you do is ok because you don’t have the courage or principles (martyrdom in Kinsella-speak) to back your position.

At least I have the good sense to know I am a conscious schizophrenic. I’m not bullshitting myself that morality exists except when it inconveniences me.

@Sweatervest, stay away from big words. You’re making my argument for me.

Wildberry June 22, 2011 at 1:52 pm

@DixieFlatline June 21, 2011 at 11:06pm

Equivocation is the refuge of scoundrels.

Do you mind if I use that? It would come in handy!

nate-m June 22, 2011 at 3:22 pm

Where is my hypocrisy? You don’t know me, don’t know where I live, whether I drive or not.

I know that you exist in this country or some other country. Either you take care of yourself or you leach off of other people.

You don’t know what I eat or how I earn my money.

I know that you act in self interest and work to provide for your needs.

Just like everybody that works at Apple or Microsoft.

Libertarians like you are a joke, you live in a dream world where you can justify what you do, but still have the temerity to criticize others, creating an artificial distinction that what you do is ok because you don’t have the courage or principles (martyrdom in Kinsella-speak) to back your position.

Your a the type of libertarian who is so intellectually dishonest you can’t see the forest for the trees. Who tries to make every issue a black and white and want to create vilians where there are none and absolutist position gets in the way of communication. You don’t discuss, you attack. You can’t seem to string together logical arguments and instead depend on what you think is clever one liners that, at the core of them, depends on you misappropriating the premise for the conclusion.

This may be helpful for you in the future:
http://www.nizkor.org/features/fallacies/begging-the-question.html

At least I have the good sense to know I am a conscious schizophrenic. I’m not bullshitting myself that morality exists except when it inconveniences me

You make way to many assumptions.

sweatervest June 22, 2011 at 4:07 pm

“Where is my hypocrisy? You don’t know me, don’t know where I live, whether I drive or not. You don’t know what I eat or how I earn my money.”

You are using an internet protocol developed at universities on the tax dollar. Keep taking it so personally though.

“Libertarians like you are a joke”

Oh no I’m so hurt I better change the way I think so you don’t think I’m a joke.

“you live in a dream world where you can justify what you do, but still have the temerity to criticize others”

Haha yes we don’t criticize others for doing the very things we ourselves do. That’s living in a dream world for ya!

“creating an artificial distinction that what you do is ok because you don’t have the courage or principles (martyrdom in Kinsella-speak) to back your position.”

Oh but this several-sentence long bitch-fest is a backing of your position? I have backed up my position with the argument that if Apple and Microsoft are guilty then we are all guilty because we do what they do. You just throw a tantrum and drop logical fallacies like you know what they are.

“At least I have the good sense to know I am a conscious schizophrenic. I’m not bullshitting myself that morality exists except when it inconveniences me.”

Yeah not ignoring the state entirely is immoral, cause you say so real angrily. You’re bullshitting yourself by thinking you know what morality is.

“@Sweatervest, stay away from big words. You’re making my argument for me.”

Haha okay whatever you say. I love when people don’t argue and think they have. See, as long as you simply claim I actually argued for you, it must be the case. No need to support that with… anything.

You need to stay away from arguments. You already misused “equivocation” and clearly have no capacity or interest to use logic so it’s clearly not your cup of tea. You just state your claims and bitch at your adversaries. Bravo.

sweatervest June 22, 2011 at 4:09 pm

Also, claiming that I made your argument for you suggests that you actually made an argument…

sweatervest June 22, 2011 at 4:11 pm

“Do you mind if I use that? It would come in handy!”

You already used it in your quotation, you intellectual thief!

Anti-IP Libertarian June 22, 2011 at 5:56 am

Your analogy is wrong:

A company that massively supports and enables IP laws and heavily enforces them by calling the state to help it is NOT the same as a mere consumer.

nate-m June 22, 2011 at 8:11 am

You use public roads made by land taken from private holders. Your dollars and economic activity creates capital that funds wars and helps contribute to the police state.

Your not a ‘mere consumer’. You and your efforts help what makes the state possible.

Your mistake is viewing corporations as anything other then groups of individuals working for their self-interest and then not using the same criteria to judge them as you use to judge yourself.

Apple and Microsoft do some miserable things and it can be useful to point those specific activities out when they occur, but a blanket condemnation of them for making profits in a state controlled economy is not useful.

sweatervest June 22, 2011 at 11:46 am

“A company that massively supports and enables IP laws”

Microsoft “enables” IP laws? What could this even mean? IP has predated Microsoft by a hundred years.

No, corporations do not enable the theft of the state anymore than all of us do by handing over our taxes without a fight.

“and heavily enforces them by calling the state”

No, Microsoft doesn’t enforce anything. They do not have courts or police. Every one of those hearings is a request by Microsoft for the state to fight for them. The state does not take orders from corporations.

“it is NOT the same as a mere consumer”

Please define what being a “mere consumer” is.

Finally, who is making an analogy? It is way too often that people mistake using a categorical form on different true premises to reach false conclusions and thus invalidate the form with making an analogy. I never said any of those things are analogous to anything else. It is the same argumentative form used on different premises and reaching absurd conclusions. That is sufficient to establish the argument as an unsound one.

sweatervest June 22, 2011 at 12:04 pm

“Apple and Microsoft do some miserable things and it can be useful to point those specific activities out when they occur, but a blanket condemnation of them for making profits in a state controlled economy is not useful.”

Yes, the point of Austrian Economics is to explain why the state controlled economy is good cause for us to expect these miserable things to happen, which clearly spells out the solution to ending those miserable things: get rid of the *state*, not get rid of or punish Microsoft or Apple so that the next corporation can come along and do the exact same thing. It is certainly not the point of Austrian Economics to point the finger at everyone that doesn’t ignore the state or even at those that ask the state for help, since if anyone of us took that seriously we would exile ourselves from society. Is every welfare recipient a thief?

Anti-IP Libertarian June 23, 2011 at 1:08 pm

“A company that massively supports and enables IP laws and heavily enforces them by calling the state to help it is NOT the same as a mere consumer.”

@nate-m: If you are not able to read and understand (!) what I wrote than that is your own fault.

I did not write ANYTHING about mere companies which just exist in a state and use what is there. I wrote about big corporations that unmistakably are involved in creating and enforcing the (ip) laws.

Microsoft and many other big corporations and not just only there use a sound and fair business model but the use the illegitimate state laws to rise their profits.

It cannot be right for anyone to tell a robber who to rob next and what share someone wants.

sweatervest June 21, 2011 at 7:31 pm

Yeah you know I recently admitted to myself that I think Apple stuff is actually pretty cool and all of a sudden I am an “Apple fanboy” according to many. Maybe we should start talking about M$ fanboys…

integral June 22, 2011 at 4:35 am

M$…

Wildberry June 22, 2011 at 1:51 pm

@Stephan Kinsella June 22, 2011 at 7:18 am

You are hard to follow sometimes:

you start a company with the express company policy that it will never use the state courts *aggressively* against other companies, but that it will use them defensively. So this way shareholders who buy shares know what the policy is so they cannot blame managmenet and directors for not suing someone for patent infringement.

First, care to explain your assumption that state courts can be used aggressively against other companies? The doctrine of malicious prosecution for example, seems to be a safeguard against that kind of groundless legal action. So, I think it is fair to say that in order to go to trial, the plaintiff must have legitimate grounds for doing so, or it gets thrown out at prelminary hearings.

Second, aren’t you blurring the distinction between offensive and defensive actions? Countersuit is not the primary means of defending against legal action. It is only necessary that one challenge the elements of the charge with counter evidence; it is called putting on the “Defense”. How do you use a defense aggressively?

The enforcement of rights, regardless of the means for doing so, is in fact a defensive action. It arises when someone violates your rights and you choose to defend them.

In the case of patents, the initial position is that someone has patent rights, and is entitled to defend those rights against infringing actions. The only way to characterize that as aggression, is to deny the existence of those rights at the outset, in which case, if there cannot be suit to enforce one’s rights, there certainly can’t be a countersuit as a defensive tactic.

If you do not deny the existence of patent rights at the outset, then why would one first seek them, and then not defend them if it was in their financial interest to do so? That seems the equivalent of hanging out a sign that says “Please rob me”.

J. Murray June 22, 2011 at 12:57 pm

That’s not really the discussion at hand. The discussion is which company would be better positioned to do well in a system without IP. To approach this question, it’s important to understand how each company’s revenue stream is generated. Microsoft’s direct-consumer revenue is relatively small. Microsoft doesn’t generate a $62 billion annual revenue selling $150 boxes containing Windows 7 and Microsoft Office, and Xbox 360 hardware (360 hardware’s average annual revenues are around $2 billion of that $62 billion). Microsoft’s primary revenue comes from service-related functions. Business software support, development support for the Xbox system, integration services. Microsoft is mainly a B2B entity with a lesser consumer-end preference. A great proxy to demonstrate the impact on IP on Microsoft’s business model is to analyze the release of OpenOffice, which is fully compatible with all Microsoft Office formats. This has not harmed sales in the slightest because the Office suite generates most of its revenue from corporate support. Companies are freely able to use OpenOffice, but lose out on all the services Microsoft offers. Microsoft’s business model is much like that of RedHat in the Linux realm, where RedHat is the sales king despite selling a totally open and freely copiable operating system. Microsoft doesn’t have a patent on knowledge workers and companies can freely compete with Microsoft even with support arrangements for Microsoft’s own products.

Apple, however, is primarily a direct-consumer company that generates all of its sales in direct customer sales utilizing a B2C model. Apple’s main income sources come from proprietary hardware sales and revenues from their proprietary and closed content delivery systems (iTunes, AppStore, etc). Apple has much more to lose in the absense of IP under their current business model. Whereas Microsoft is already competing with other companies for services for its own products, and winning, Apple is effectively insulted from any serious competition. Because of this competition insulation, Apple is capable of enjoying much higher profit margins, which produces a company that unlikely has a culture of efficiency. They’re fully aware that the iPhone, for instance, is a completely closed system. Nothing goes onto it without the express approval of Apple and through Apple’s delivery method, from which Apple generates a cut of the revenue. Apple has no need to worry about content delivery competition on its platform from places like Cydia because anyone who attempts to use Cydia and the like will have their devices permanently disabled (lest they know how to unlock them, like I had to for the “crime” of using a custom ringtone).

Apple deals primarily in the physical and tangible to the end-consumer. The visual style of the iPhone/iPad/Mac itself, sales of iOS enabled devices, and a gatekeeper attitude over all content entered into their products, of which they get a cut of the sale. If individuals are freely able to obtain the MacOS and place it on their own hardware, Apple can no longer enjoy the gigantic hardware markups they currently enjoy (as you noted, on the order of 100%), especially considering that there is almost nothing proprietary left in an Apple box since they use off the shelf Intel processors and Nvidia graphics cards for laptops and computers, and off the shelf ARM processors for the iPhone/iPad. Consumers could purchase a much less expensive, yet identically featured, “knock-off” of effectively the same quality, obtain an iOS install, and have a cheap yet functionally identical iPhone for much less than the current prices offered. Third parties can offer their own AppStores (like Amazon’s on Android that competes with the Google one) that have lower to no fees for developers, thus attracting a larger developer base and offering less expensive fare. Apple’s revenue stream will defeinitely suffer considering they’re offering a bare-bones experience for the most part. Customers aren’t paying Apple for a unique, only they can offer service, customers are paying fees to use their own devices as intended. Apple doesn’t offer much beyond passive services, and this is the double-edged sword Apple is playing with. Passive services work wonderfully in an IP environment because passive services require little input on Apple’s part. They can just turn it on and let the revenues flow in, confident that no one is legally permitted to copy the service in any way or even let competitors enter their walled garden.

This is why I see Apple as the biggest winner in an IP envrionment and the most likely to be the biggest loser should IP vanish tomorrow when compared to Microsoft. Microsoft generates its revenues primarily on active service offerings and assistance to business customers. Apple produces most of its revenue on protected hardware sales and usage fees. Copying Microsoft’s service expertise is incredibly difficult. Cobbling together your own Mac or iPhone without having to go through Apple is easy.

Salamanca34 June 21, 2011 at 11:10 am

No doubt Bill Gates is a bad choice, but I think Atlas was trying to appeal to a broad audience that have not yet been brought over to free market and libertarian ideas. Bill Gates is a household name that everyone knows. You lure them in with a video with broad appeal using a easily recognizable example like Gates, and hopefully they convert to libertarian free-marketeers. When that happens, then you can barrage Gates for the IP thug and mercantilist that he is.

Correct in principle, but poor in application, like the reply video says.

DixieFlatline June 21, 2011 at 11:36 am

How much was Microsoft advantaged by being the default operating system of all the US government bureaucracy? That has a trickle down effect to all of the tier one vendors and contractors, and so on. If you have to open and edit a .doc or .xls file in 1998 (before the advent of other solutions), that helps push licenses to the masses.

Salamanca34 June 21, 2011 at 11:57 am

Open question to everyone:

Would Linux based openware be the ideal anti-IP paradigm?

J. Murray June 21, 2011 at 2:01 pm

It is, but Linux is disadvantaged considering its reputation. It’s built a reputation as being an unwieldy and difficult to use operating system. Much of these problems have been rectified and newer Linux builds look little different from a Windows or MacOS machine. For the longest time, it was difficult to get hardware drivers, to install them, or do other basic functions that chased away most users.

The biggest problem, where IP comes to play, is the overall cost of migration from a Windows system to a Linux box. Because Linux has few options to get Windows software running at optimum efficiency, users either have to use WINE, obtain an alternate, or do without. When users have years or decades of Windows software, changing over to a new OS becomes an expensive and unappealing prospect. This creates software momentum among developers. Users don’t want to switch operating systems to lose software, so developers develop for that platform, which users buy, thus increasing the incentives to keep the system intact. Since Linux can’t ape the code in Windows 7, for instance, to allow legacy and new software to run under Linux, the OS is at a severe disadvantage. In instances where fresh, new software is the norm, like super computing and even network management, Linux is a far and away leader, having even toppled Microsoft in web servers.

That last one is the single roadblock for me to totally adopt Linux. Everything else is basically on-par with Windows, but I still enjoy PC gaming, which is predominantly a Windows habit.

J. Murray June 21, 2011 at 12:08 pm

I wouldn’t call repackaging long existing technology into a white container with sleek edges innovative. Apple’s strength is in their marketing division, not in their programing or hardware development arms. And if it wasn’t for patents or copyrights, Apple couldn’t rent their hardware to consumers for the prices they’re asking. Apple’s closed OS behavior and permission-based product use is already starting to fail on the marketplace considering the iOS has lost market share rapdily under the Android onslaught and is quickly retreating to it’s desktop OS market share numbers. And this is despite iPhones being priced comparatively and enjoying a near 2 year head start. People just don’t like having system functionality locked down for no good reason other than some weak stability excuse (not that it mattered, my first gen iPhone crashed more frequently than my now aged HTC Incredible). They would probably fail faster if it was permissible to take the iOS and add in customizability, such as when Apple decided to lock-out my first gen iPhone (thus locking my wallet out of future Apple products) because I dared use a custom ringtone I didn’t pay $2 to obtain from Apple’s approved list of ringtones. I had to find instructions to jailbreak it, which is apparently illegal. Needless to say, I’ve unloaded that trash long ago.

It’s unlikely that Apple could even hold onto its enemic 7% market share (this is MacOS and iOS combined) in the US, far lower worldwide, and high share price if they weren’t covered under copyright and patent law. Sure, Microsoft would probably take a bigger hit under the same situation, but Apple is by far a greater beneficiary of patents and IP considering without them, Apple is in greater risk than the big MS of completely going out of business without the protection.

Per L Bylund June 21, 2011 at 12:28 pm

Yes, I am inclined to agree with most of this analysis. See my statement a few minutes ago.

Windows Hater June 21, 2011 at 4:42 pm

QUESTION: “Apple vs. Microsoft: Which Benefits more from Intellectual Property?”
ANSWER: Neither, it’s the government which benefits.

sweatervest June 21, 2011 at 7:38 pm

Yeah seriously let’s not forget how much both of them are taxed.

Franklin June 21, 2011 at 8:17 pm

“Who benefits more….?
ANSWER: Neither, it’s the government which benefits.”

Standing ovation.
And the subtle parallels ingenious. Very, very well said.
The argument reminds me of debates over democrats vs. republicans and the claims, counter claims, bickering and snickering among the hangers-on, the special interested beneficiaries, and the chattering mobs.
The name of the game is to argue over who manages the system better, rather than recognize the thuggery that _is_ the system.
They _want_ you to choose sides.
They _want_ you to line up behind the behemoths, waving the faces of Bill or Steve.
The life of their circus depends on it.

Anti-IP Libertarian June 23, 2011 at 1:11 pm

WRONG.

State-created monopolies/oligopolies do benefit the holder of that monopoly/oligopoly. The state enforces it but the company who holds that monopoly DOES profit (at the cost of all others).

ABR June 22, 2011 at 12:47 am

The big problem facing a product technology company — in the absence of IP — is secrecy. If but one employee of a software company were to release source code surreptiously, the company would find itself in a pickle, as other companies might use that code to produce their own executables. For that reason, I don’t think there would be too many product software companies.

I suspect most technology companies would be in the service or support biz, helping clients with unique problems. As for hardware, the client might be the manufacturer of the hardware. That is, the manufacturer might approach a design company with a request, and then manufucture the design, knowing that it, the manufacturing company, has an advantage over others not only as first-to-market but in its ability to build things more cheaply than others. But again there is the secrecy problem.

It’s really hard to predict what might happen.

Anti-IP Libertarian June 22, 2011 at 5:52 am

Apple would have a hard time selling its products at its current price level in a world without ip laws and enforcement:

What about “product piracy”? Apple even sued Samsung!

What about patents? See the patent law suits on apples behalf

What about their Itunes store? There is no other official store for Apple apps at the moment… because of ip laws.

Anti-IP Libertarian June 22, 2011 at 6:04 am

Regarding how much the existence of ip laws influences companies takes us to two kind of scenarios and questions:

A) If ip laws were banned today how would that affect present companies?

And

2) If ip laws never existed at all how would that affect eg IT companies, how would they look like today?

Those are two distinct questions regarding two distinct scenarios!

I say that regarding question 2) such big IT companies would not exist at all.

Anti-IP Libertarian June 23, 2011 at 1:18 pm

Something to think about for the “oh its just them evil politicians, but all the big companies are innocent”-followers:

Imagine you lived in a kingdom with a cruel king. There are taxes and all that evil stuff.
What if someone (lets call him Bill Stevens) had a company there AND (!!) advised the king to grant him a monopoly?
What if Bill Stevens asked the king to enforce that monopoly?
What if Bill Stevens advised the king on new laws that diminish liberty?
What if Bill Stevens asked the king to give him some tax money (and tax the people living in that kingdom a bit more)?
What if Bill Stevens sued everyone copying his products?

Do you really think that only that cruel king and his underlings are the evil ones and Bill Stevens is just an innocent entrepeneur?

What if Bill Stevens asked the king to imprison some people who did not follow the aforementioned laws?

nate-m June 23, 2011 at 1:22 pm

Something to think about for the “oh its just them evil politicians, but all the big companies are innocent”-followers:

Nobody said or believes that.

Anti-IP Libertarian June 23, 2011 at 4:04 pm

Oh yes, you yourself did!

I never said anything about corporations themselves but only spoke about certain corporations:

“A company that massively supports and enables IP laws and heavily enforces them by calling the state to help it is NOT the same as a mere consumer.”

But you stated:

“Your mistake is viewing corporations as anything other then groups of individuals working for their self-interest and then not using the same criteria to judge them as you use to judge yourself.”

Anti-IP Libertarian June 23, 2011 at 4:07 pm

Additional answer:

If you cannot discriminate between a) just using something after the fact as a consumer or a corporation (like roads) and b) heavily lobbying for something evil and enforcing that evil like some (big) corporations and people do than that is your problem.

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