I am really glad that folks around here have picked up this bundling conversation. See, for example, Stephen Bainbridge’s observations, who argues that bundling is anticompetitive. I disagree, as long as the consumer has an opportunity to say “no” and use something else. And of course under the usual dynamics of R&D and competition, some people will be happy with IE, others will not, and as long as there is diversity of preferences, a monopoly browser is unlikely to exist in reality.
Not surprisingly, Brad DeLong feels he’s been harmed by Microsoft too, and argues accordingly. The comments on his post are particularly interesting, especially the one from Phil Hallam-Baker, who was on the original web team at CERN.
Alex Tabarrok has a great post from this morning on the topic, focusing on Brad’s argument that he’s been harmed. Alex’s argument does three important things: it focuses us on the fact that when goods have complementarities and we don’t allow bundling, if both markets develop into monopolies then you have the double monopoly or double marginalization problem, which is a textbook recipe for deadweight loss and a decline in consumer well-being. He also brings in the fact that vigorous competition for browser market share is a form of R&D-based franchise bidding, in which the competitors know they are competing for a large and stable market share. Alex’s argument also reminds us of the importance and value of contestability, which a lot of the pro-regulation voices on this topic discount, incorrectly I believe.
Arnold Kling also has a post on the subject, correctly noting that bundling is all around us, always has been, and has value to consumers. He concludes:
Regulators could argue that bundling by Microsoft or the cable companies needs to be regulated because those companies have monopoly power. But I would rather see product specifications and pricing set in a market, however imperfect, than set by a government bureaucrat. At best you are exchanging one uncompetitive decision process for another.
I do not see any way to preserve the free market system if you decide that bundling provides a rationale for regulation.
Consumers making choices decide on the optimal degree of bundling. Some of them are large consumers that move the market share and the bundling more toward single provider (like the federal government’s procurement decisions on its computers). But we can still say no, and we have options.
Phil Hallam-Baker is right, that Microsoft did get ahead in the browser part of the value chain by building a better browser. That is no longer necessarily the case. Note IE’s absence of tabbed browsing, for example, which is a great organizational tool when you have to have lots of pages open.
In my case, the only time I use IE is if a page is not loading properly in Mozilla. Uusally it involves Java script problems. No biggie.
BTW, do the Movable Type folks know that the little url/bold/italic/underline macros only show up in IE? I hard code everything on this blog b/c the cute little buttons at the top right only show up when I use IE. Not worth it. But if the MT folks want to improve MT, having the macros work with more browsers would be good.