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In what sense does ANTITRUST policy conflict with innovation policy??

Ok, I'll bite. Give more background info though. Is your q, "How does the government's antitrust policy conflict with innovation policy?"
 
In theory the government (through antitrust activity) becomes the de facto authority on what can and cannot be included (ala bundled) in a package. So before the fall, AT&T was going to offer local/long distance, cable, and broadband service . . . but first they had to fight about opening their cable lines to competitors and federal limits on the percentage of cable subscribers they could service. If AT&T had the "opportunity" to roll out a nationwide network as opposed to piecemeal they could bring a service many people would want at a lower cost from a single provider. But gubment regulations are a disincentive to invest heavily b/c the return is arbitrarily limited.

M$ presents a similar argument. Word is just a word processor. Excel just a spreadsheet. Access just a database. Stick them together you've got a productivity suite. M$ has made your life easier by providing one-stop shopping for all your software needs. Hate learning how to use a new OS when changing jobs or going from home to work? Just buy M$ and you are guaranteed ease of use due to familiarity.

A better case is in the browser war. No one could have predicted the power/influence of the Internet. So what M$ came to the party late? So what their first product svcked? It was still free and it was integrated with the OS and the productivity software. Companies give people what they want and more. People will purchase the best/easy to use product. Gubment regulations weasel between that relationship and put up barriers to offering new products to the public. If there is limited opportunity for profit why bother investing in new technology . . . particularly if the gubment may make you give it to your competitors who didn't have the motivation to do it themselves.
 
In summary, the goal of capitalism is to provide a product that people want. Success (in principle) comes from offering the best product at a competitive price . . . in reality it is offering something many people desire at the highest price they are willing to pay. If I'm successful I will build on that success . . . to stay ahead of the curve. I'm constantly changing my product or service to provide an incentive to consumers. Profit is my incentive. Any policy that affects the bottomline invariably will affect the type of risks that I'm willing to take in order to bring innovations to market. Competitors have the same motivation. So regulations intent upon "leveling" the playing field do so by cutting everyone off at the kneecaps. It stifles competition and innovation b/c there's no reward for having the best/most popular product.

 
Because in goodspeak monopoly IS innovation, competition is confusion, and consumer choice is less efficient than all software flowing from a single supplier. At least that's what I learned in the Redmond re-education camps.
 
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