In spite of the tendency for single firms to dominate high-tech industries, however, they are generally unable to act like monopolists, either by raising prices and or by failing to innovate. For lurking around every corner are potential threats to their dominance. The recent history of high technology is littered with once dominant firms that failed to run hard enough to stay in place McDonnell-Douglas, Polaroid, Cray and Silicon Graphics, to name just a few. The most obvious threat to Windows is from Linux, an operating system that is now used on some 10 million personal computers. But, arguably, the more potent threat is from new applications software that resides on Internet servers and can be accessed from any PC linked to the Internet using any operating system.
Antitrust activism threatens the general health of high-tech industries in three ways.
If business success that leads to a large market share and big profits automatically leads to government intervention, fewer entrepreneurs will invest in the radical innovation that could give them market dominance. If large, aggressive firms are told to be kinder to competitors, consumers will suffer. Competition and innovation have driven the American economy forward in an era that has seen more regulated industrial economies elsewhere stumble. The writer is dean of the Sloan School of Management at the Massachusetts Institute of Technology and a consultant to the Microsoft Corporation. He contributed this comment to the International Herald Tribune.