Microsoft Buyout of Apple?

[Le Big Mac]

more like the SEC - Securities and Exchange Commission

More like the department of justice or the federal trade commission.

it won't happen because of antitrust, and it won't happen because it makes no sense for microsoft to do it, other than to kill apple, which is why it goes back to the antitrust problem. Why would microsoft want to become a PC maker?

 

[IJ Reilly]

The obvious word here is "Office," but recall that Microsoft provided Apple with critical funding (US$150 million) when it was about to go under so that the firm could come out with new hardware and finish its new operating system. In addition, Microsoft, in continuing to support Apple with Microsoft Office, allows Apple to sell in a lot of places it otherwise would be locked out of.

Enderle is nuts, and what's more, he doesn't know his history.

For one, Apple was never "about to go under," and they had over $1 billion in cash at the time Microsoft provided them "with critical funding." Second, the money was for the settlement of patent disputes, not so they could "come out with new hardware and finish its new operating system," which in the latter case, hadn't even been started yet. Third, Microsoft continues to develop Office for the Mac not out of good will, but out of a desire to make money.

Enderle should stick to writing about what he knows, whatever that is.

 

[pyrophite]

Hmm, this certainly has a bit of misinformation here. First of all, the FTC can only step in if there is an emerging monopoly. Unfortunately OSX isnt the ONLY other operating system. Even though all the different linux solutions, and small OS's dont seem like a competitor, they technically keep microsoft from being considered a monopoly, even in the abscence of OSX. The same goes for intel, if AMD went out of business, there are still companies such as motorola and transmetta that would keep them from violating anti-trust laws. The original anti-trust suits from microsoft didnt even have anything to do with windows, it had to do with the way internet explorer was integrated into the OS.

Also, on the issue of Jobs keeping microsoft from purchasing Apple? If i have my information straight, i dont believe Jobs has a controlling interest in Apple, he may have a large portion of stock, but i dont think he has enough to keep a takeover from happening. A CEO has little to no say if a company can be purchased if the stock is publicly traded. The honest truth is that since apple is a strong company, and microsoft is a behemoth, chances are that M$ would have to pay such a premium for apple as a company, shareholders would be more than happy to sell their stock for such a great price.

Will it happen? Probably not likely, the cost would be so high (probably close to $75-100 billion, that they'd have to give up too much cash and cut funding to their own projects. But all things considered it isnt out of the question, look at AOL and Time Warner, or Cingular and AT&T.

 

[Le Big Mac]

Hmm, this certainly has a bit of misinformation here. First of all, the FTC can only step in if there is an emerging monopoly. Unfortunately OSX isnt the ONLY other operating system. Even though all the different linux solutions, and small OS's dont seem like a competitor, they technically keep microsoft from being considered a monopoly, even in the abscence of OSX.

The FTC can block an acquisition even if it would not create a pure monopoly (i.e., only one firm). They have blocked numerous mergers where the combination would result in 2 or 3 remaining firms. So they certainly could.

Now, would they? That depends on the facts. It certainly might be possible to show that OS X does not constrain microsoft in any way. That is, the price of windows is not kept low because of OS X. Rather, it's kept low because of linux. Or it's kept where it is because it's already a monopoly, and faces no constraints.

That said, I think that Microsoft would have a very difficult time justifying the acquisition of the only alternative consumer operating system (I don't think Linux is used by a lot of basic computer folks--it's a bit more advanced, requiring more knowledge of computers).

 

[pyrophite]

The FTC can block an acquisition even if it would not create a pure monopoly (i.e., only one firm). They have blocked numerous mergers where the combination would result in 2 or 3 remaining firms. So they certainly could.

Now, would they? That depends on the facts. It certainly might be possible to show that OS X does not constrain microsoft in any way. That is, the price of windows is not kept low because of OS X. Rather, it's kept low because of linux. Or it's kept where it is because it's already a monopoly, and faces no constraints.

That said, I think that Microsoft would have a very difficult time justifying the acquisition of the only alternative consumer operating system (I don't think Linux is used by a lot of basic computer folks--it's a bit more advanced, requiring more knowledge of computers).

I suppose if the FTC blocked the sale by considering OSX and windows as the only real "consumer" os's i could see your point. There still has to be an implied monopoly. An oligopoly has no room for the legality to block a sale. Most of the cases where you'd see such a block is when there's an implied monopoly, or the high liklihood of an implicit collusion of the remaining firms (think oil companies).

 

[IJ Reilly]

FWIW, monopolies are not illegal under U.S. antitrust laws. What is illegal is abusing market power to restrain competition. Ironically, abusing market power is possible with far less than an absolute monopoly, a condition that rarely exists in markets anyway.

And another thing, hostile takeovers are rare nowadays because most publicly-held corporations have taken to building "poison pills" into their bylaws, making hostile takeovers difficult if not impossible to accomplish. I am virtually certain that Apple has one, as I recall this coming up years ago, when Apple was beaten down and often discussed as a takeover target.

Finally, it's the SEC that rules on competitive issues in mergers and acquisitions. Complaints about anticompetitive behavior can be brought to the FTC or the Department of Justice Antitrust Division. Not than any of these agencies much care about antitrust issues anymore. They're all geared up to allowing corporations to do more or less as they wish.

 

[pyrophite]

The Clayton act states that it "prohibits mergers or acquisitions that are likely to lessen competition. Under this Act, the government challenges those mergers that careful economic analysis shows are likely to increase prices to consumers."

and a monopoly is defined as: "A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition - which often results in high prices and inferior products."

In my opinion, that is what i am refering to as an "implied monopoly"

 

[sam10685]

they could call it "Microapple." ******* WORST idea i've ever heard in my life.

 

[IJ Reilly]

The Clayton act states that it "prohibits mergers or acquisitions that are likely to lessen competition. Under this Act, the government challenges those mergers that careful economic analysis shows are likely to increase prices to consumers."

and a monopoly is defined as: "A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition - which often results in high prices and inferior products."

In my opinion, that is what i am refering to as an "implied monopoly"

Also, the Sherman Act. The dictionary or even the economics text definition of monopoly does not really apply to discussions of U.S. antitrust laws. These laws are concerned with restraints on competition, a condition which can exist without the existence of a technical monopoly, implied or otherwise.

 

[pyrophite]

Also, the Sherman Act. The dictionary or even the economics text definition of monopoly does not really apply to discussions of U.S. antitrust laws. These laws are concerned with restraints on competition, a condition which can exist without the existence of a technical monopoly, implied or otherwise.

I think we pretty much have the same view on this, only using different semantics.

 

[IJ Reilly]

I think we pretty much have the same view on this, only using different semantics.

Could be. I spent a lot of time in the trenches debating the Microsoft situation during the antitrust trials, so I tend towards a knee-jerk reaction when this topic is brought up. I got really weary of hearing people argue that Microsoft should not have been subjected to prosecution under the Sherman Act because Apple exists so therefore they could have no monopoly. It was never really about monopoly, which becomes shorthand for other things, and thus confuses matters.

 

[direzz]

i think it would be beneficial to both companies

 

[pyrophite]

Could be. I spent a lot of time in the trenches debating the Microsoft situation during the antitrust trials, so I tend towards a knee-jerk reaction when this topic is brought up. I got really weary of hearing people argue that Microsoft should not have been subjected to prosecution under the Sherman Act because Apple exists so therefore they could have no monopoly. It was never really about monopoly, which becomes shorthand for other things, and thus confuses matters.

Heh, yeah i was studying it in my business law classes when it was going on. There's a lot of nuances that a lot of general public doesnt hear about on both sides. I never really took a side either way, i was just hoping that in the end, the lawsuits wouldnt end up causing microsoft to pass on the costs of litigaion to the customers. I'm a consumer capitalist at heart.