Kind hearts or charlatans?


1 April 2005

Older readers, or those who consider themselves film buffs may remember a delightful comedy from the 1950s called The Mouse that Roared. 

Starring the great Peter Sellers, its story line centred on a fiendishly clever plot by the government of the tiny impoverished Duchy of Grand Fenwick (all played by Sellers) to declare war on the United States in the certain knowledge that they would lose and so benefit from ensuing American aid. The Marshall Plan, in operation at the time was helping to rebuild Europe after World War II with American investment.

In the movie, the scheme failed when the army of Grand Fenwick arrived in New York armed with bows and arrows, only to find that the Big Apple has been deserted by its inhabitants because of a nuclear alert. The fact that the tiny Duchy ends up actually winning the war, need not concern us here. The important point to recognise that crafty operators can often see in advance that a nominal defeat can work to their benefit.




I suspect that similar thought processes were at work when Microsoft tried in November to reach an out of court settlement with more than 100 plaintiffs who have all brought private suits against the company alleging that it overcharged for its software. Having settled its long-standing dispute with the US Department of Justice and most of the individual states that had brought cases against it, Microsoft has only these individual plaintiffs left as opponents in its antitrust battles. 

A preliminary agreement between the parties suggested that the cases would be dropped in return for Microsoft pledging to donate more than $1bn worth of PC equipment including software to some of the poorest schools in the US. 

However the deal may yet be stymied because some parties have objected strenuously. It might seem at first glance that only the most mean-spirited churl would object to underprivileged schools receiving free educational equipment on the grounds that the donation is part of a more nefarious larger plan, but such objectors are quite right in this case. 

A billion dollars is a comparatively small sum to a company with an annual turnover in excess of $25bn and a market value that hovers around $300bn. For its outlay, not only does Microsoft hope to call off the legal wolves, it is also implanting its own products in the consciousness of the young and impressionable. 

Now that is all well and good and part of the process of creating demand that is central to any marketing campaign, but this initiative should be seen as just that and therefore it should be financed by Microsoft’s marketing budget; not the one set aside for legal redress. 

Especially because the only serious competitor to the Wintel architecture in the PC market is Apple. Even though its market share and revenues are dwindling it remains strong in the very market — education — that Microsoft is promising to endow with its penitential largesse. In any other situation this could be seen as a deliberate attempt to force a weaker competitor out of a market by predatory or below-cost pricing, both practices that are frowned upon by many countries’ trade laws. 

Perhaps this is wholly coincidental. Perhaps when presented with such an interpretation, senior Microsoft personnel might wobble their heads in amazement and say: ‘Goodness Gracious me!’ in vintage Peter Sellers style. But I doubt it. 

Maybe it’s because I’m a parent who is occasionally forced into parsimony when faced with demands by those I find hardest to refuse – ‘No you’re not getting a £40 genuine Harry Potter Quidditch Broom for Christmas. Use a hurley and your imagination.’ – but, I particularly resent children being used as leverage by marketeers to extract more from my wallet than I deem reasonable. 

Whatever the rights and wrongs of Microsoft’s actions in the past we have long said that the attempts to dismember it by legal means were futile and potentially damaging to the industry as a whole. But now that the overall situation is so close to resolution, Microsoft should do the decent thing and settle this outstanding matter properly — by dealing directly with the plaintiffs without bringing the poor into the squabble.

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