Antitrust creates an atmosphere in which the prominently successful are potential criminals, simply because they are prominent.

Microsoft has greeted Google’s US$3.1 billion purchase of Doubleclick with the highest honour a competitor can bestow - antitrust concerns.

Brad Smith, (Microsoft) said in a statement that Google’s purchase of DoubleClick ” raises serious competition and privacy concerns in that it gives the Google DoubleClick”. “We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market,” according to Smith.

Microsoft was the target of antitrust case in the late 1990s based ostensibly on the economic construct of ‘path-dependence’, a theory which describes network effects that let bad products beat good products in the market place. In reality, the case was brought about MS’s competitors who could no longer compete against them. MS’s attack on Google is another unfortunate shot in antitrust battles of the software industries - Google last year attacked MS for embedding MSN in IE7, an accusation very reminiscent of the 1998 case.

Its hard to reconcile any of these accusations of anti-competitive behaviour with the history of the software industry. The book linked to above - Winners, Losers & Microsoft: Competition and Antitrust in High Technology by Stan J. Liebowitz & Steven E. Margolis - focuses largely on the issue of path dependence and ‘lock-in’, but by doing so, provides a potted history of the adoption of word-processors, spreadsheet software, media players and so on. Their analysis, which covers the 1990s, describes a vigorously competitive marketplace. Consumers adapt the best software - Liebowitz and Margolis demonstrate this by looking at the software reviews of the time, not through mere nostalgic reminiscences about the good old days of WordPerfect - and they adapt it quickly.

All of this makes sense. It is hard to imagine a less appropriate field for the application of competition law than the software industry. There are no ‘natural’ bottlenecks produced by the uneven distribution of natural resources. There has never been any significant government intervention in the software marketplace - unlike, say, the telecommunications industry.

And crucially, given the rapid and unpredictable pace at which innovation occurs in the software marketplace, it is impossible to tell if the market is acting optimally or sub-optimally. This is true to a degree in any industry - predication requires omniscience - but particularly so in this case. As an example of the speed and unpredictability of software markets: when Google bought YouTube late last year for US$1.65billion, the site had only been operating for 18 months. That is a pretty fast turnaround.

As a result, claims of anti-competitive behaviour in software rest on dubious theories - often based, as Liebowitz and Margolis show, largely upon misreading of history, see ‘The Fable of the Keys‘ - but are actually attempts to extract what Cylde Wayne Crews Jr has described as corporate welfare through competition law. Assuming the legal system treats these accusations with the dismissal they deserve, Google in this case should be very pleased with its competitors responses - particularly the response of advertising mogul Sir Martin Sorrell of WPP, who has merely illustrated how good he thinks the acquisition of Doubleclick will be for the search giant.

A rule of thumb: if a competitor accuses you of anti-competitive behaviour, you’re probably doing something right.

In one of the most striking minor roles in cinema history, Orson Welles’ Third Man speech:

In Italy, for thirty years under the Borgias, they had warfare, terror, murder, bloodshed — they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, five hundred years of democracy and peace, and what did that produce? The cuckoo clock.

But Switzerland didn’t invent the clock. It did invent absinthe, an achievement which should, by itself, justify five hundred years of idleness. But they invented a lot of other things.

Pinky and the Brain got it right:

In Italy under the Borgias they had 30 years of murder, bloodshed, warfare and produced indigestible pasta, boring operas, and the Fiat. In Switzerland, they had brotherly love, 500 years of democracy and peace, and what did they produce? The Swiss bank account, the best cheese in the world, and Heidi.

Sorry for the week between drinks. Here’s a picture:

A remarkably poor review of Brian Doherty’s Radicals for Capitalism in the New York Times, dismissing the entire libertarian movement as simply a rhetorical aberration:

If an item becomes scarce, its price will rise, ensuring that people who place the highest value on it — those who can use it most productively — will be able to get it. To this coolly economic argument, Rand and other writers added a moral one: laissez-faire capitalism equaled freedom.

From that we get: Iraq is some sort of ‘free market’ war, ‘cap and trade’ is somehow libertarian, and libertarians really love tyranny but are afraid to admit it.

UPDATE: David Boaz gives the review a more comprehensive fisking at Cato@Liberty.