Microsoft’s Other Strategy: Raise Google’s Costs


In the standard model of how to beat out the competition, a business seeks to produce better products at lower costs. Lowering costs, however, can be extremely difficult, especially if you are running a tech company that has to hire out of a relatively limited pool of highly skilled programmers. Thus the temptation arises to use a different strategy to beat the competition: find a way to raise the costs of your rivals.

The best way to raise your rival’s costs is by getting the government to do it for you. Microsoft, which was once an innocent when it came to the ways of political entrepreneurship, has become something of a pioneer in using the government to beat up on rivals. Maybe it learned its lesson in the value of having the government on your side during its long anti-trust battle with Netscape.

The long story in Wired magazine on “The Plot to Kill Google” describes some of Microsoft’s attempts to use the government against Google. We were familiar with the story of Microsoft killing an ad deal between Yahoo and Google by getting the anti-trust folks at the Justice Department involved. But we had no idea about the bills Microsoft urged to crack down on information gathering.

From Wired:

“Last spring, Microsoft supported bills in the New York and Connecticut legislatures to impose strict regulations on businesses that gather personal information online for marketing purposes. The bills would hurt Microsoft, too, given that it also wants to sell advertisements based on customer behaviour. But the self-inflicted wound may be worth it for the damage it causes Google.”

Google, of course, is no longer an innocent in this matter either. It’s agitation for net neutrality also has the smell of political entrepreurialism about it.

(Hat tip: Jesse Walker at Hit & Run.)


  • Consumer Safety Law To Screw Small Businesses