Make ’em pay

by Michael Alderete on 5/21/2002

I’m convinced there’s no lie Microsoft won’t tell, no line they won’t cross, to be able to continue to behave exactly as they want. Using the war against terrorism is the latest absurdity.

Given this and Bill Gates’s threat to pull Windows from the marketplace if forced to make any court-ordered changes to his software, it’s clear the only successful remedy in the Microsoft antitrust trial will be structural.

Dave Winer recently wondered if the blogging community could help solve the sticky issues of finding an appropriate remedy. So I have an idea.

One of Microsoft’s mightiest weapons is the huge pile of cash they sit on, more than $40 billion. Among many other things, it lets them buy their way into new markets, taking huge losses for years to drive out competitors. Taking most of that money away would at least slow them down.

But taking $40 billion away from them isn’t something that would be “fair” (though why the rules of fair play should apply to Microsoft is beyond me). There is a way around this.

Make them pay a shareholder dividend. A biiiiiig dividend.

It’s common practice for companies with profits or ready cash the size of Microsoft’s to pay dividends; indeed, Microsoft’s cash hoard is twice the size of GM’s, a company with 7 times the revenue. (In other words, they should need lots less, but have much more.) It’s even arguable that holding that cash is a tax dodge.

So, for a lot of reasons, a court-mandated dividend that shrank the pile of cash to something reasonable — say, $4 billion — would be a structural change that could both positively affect Microsoft’s behavior, and be a nice bonus for shareholders.

This idea isn’t a complete solution, but it’s a possible component. Take it or ignore it, whatever.
Disclosure May Endanger U.S.
Gates: Remedy “Impossible”
Can Boggers Solve MS Problem?
Microsoft Tax Dodge

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