A lesson for policymakers: Competition is working in tech

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  • Microsoft is embracing do-not-track to stay competitive with #Google, #Apple and other tech giants.

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  • Customer concerns about #privacy serve as a business opportunity for #Microsoft, building on its traditional strengths.

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  • Lesson for policymakers: Hasty regulation of competition between #Google, #Apple and #Microsoft is unwise.

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  • Success of #Apple has brought new problems with viruses and security, creating an opportunity for #Microsoft.

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  • “Competition is about both shaping and responding to customer concerns and demands in the marketplace.” @nickschulz

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There are several interesting implications from the decision by Microsoft to set do-not-track as the default setting for its browser in the next version of its operating software, Windows 8.

First, despite the hand-wringing from media watchdog and consumer activist groups, the tech sector continues to be extremely competitive. While they don’t say so explicitly, it’s clear Microsoft is embracing do-not-track as a means of competing with Google, Apple and others.

Competition is about both shaping and responding to customer concerns and demands in the marketplace. Microsoft clearly sees customer concerns about privacy in the digital age as a business opportunity: Give consumers something they say they want in the form of greater sense of protection as they navigate the online world.

In a sense, Microsoft is building on traditional strengths. For over a decade now, Microsoft has heard from its customers about the need for robust security when it comes to its operating system. The point has been that consumers want the flexibility and power that comes from software productivity tools, but only up to a point. They need to feel secure.

And so Microsoft has spent the better part of a decade investing heavily in bolstering the security of its products. The decision to embrace do-not-track can be seen as an extension of Microsoft’s emphasis on satisfying customer demand for security and safety.

Interestingly, it’s this focus on security that might help Microsoft in its battles with Apple. As Apple has made inroads into the PC and laptop markets, and as it has created entirely new markets in mobile and tablets, the future of personal computing was seen by many to be slipping away from Microsoft.

"It’s better if firms can compete against one another, informing customers of options, and vying for customer loyalties by providing the level and scope of privacy they actually want." -Nick Schulz

But Apple’s enormous success has brought new problems, and it is now facing significant challenges as its products become more popular targets of viruses and other security threats. Microsoft surely sees an opportunity here to emphasize the knowledge and expertise it has developed over the years when it comes to security.

The latest salvo over do-not-track should also be seen in the context of the fight over the next big prize in tech battles: the cloud. The provision of cloud-based computing services will have Microsoft duking it out with Apple, Google, Amazon, and many others. Firms will compete with their technologies, but also with their strategies and business models. Firms will fight to differentiate themselves in myriad ways, and concerns about security will surely play a role. Here Microsoft thinks it can compete and win.

There are lessons in all this for policymakers. The fears about loss of privacy expressed by some consumers have always been a little ill-defined and overly general. That’s one reason policymakers should move slowly when it comes to regulation. It’s better if firms can compete against one another, informing customers of options, and vying for customer loyalties by providing the level and scope of privacy they actually want.

There’s a broader point, too. The technology sector—from search to broadband to mobile to social—is today highly dynamic and evolving. Yes, there are some firms that are more dominant than others in certain areas—Verizon and ATT in mobile, Microsoft in operating systems, Apple in tablets, Google in search, Facebook in social. But all of these companies are competing and cooperating with one another in myriad and complex ways. And it means hasty regulation is unwise at this point.

As the concern over privacy demonstrates, it did not require explicit, heavy-handed regulation to broaden consumer choices and realize new opportunities in the marketplace. Competition is working.

Nick Schulz is the editor-in-chief of American.com and the DeWitt Wallace Fellow at AEI.

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About the Author



  • Nick Schulz was the DeWitt Wallace Fellow at AEI and editor-in-chief of American.com, AEI's online magazine focusing on business, economics, and public affairs. He writes the “Economics 2.0” column for Forbes.com where he analyzes technology, innovation, entrepreneurship, and economic growth. He is the co-author with Arnold Kling of From Poverty to Prosperity: Intangible Assets, Hidden Liabilities, and the Lasting Triumph Over Scarcity. He has been published widely in newspapers and magazines around the country, including The Washington Post, The Wall Street Journal, the Los Angeles Times, USA Today, and Slate.

  • Phone: 202-862-5911
    Email: nick.schulz@aei.org

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