Bill Brenner, a columnist for searchsecurity.com posted an article which suggests that as of recently, it seems that Microsoft has been using predatory pricing on its security software called OneCare.
Although this is difficult to prove, evidence suggests that this is indeed the case: OneCare costs $49.95 for three PCs, while McAfee and Symantec’s antiviruses for three PCs sell for $69.99 and $89.99 respectively. Microsoft’s price is almost 50% below Symantec’s and more than 60% below McAfee’s.
Without further analysis, this may seem healthy for the consumer; but it’s not. In the words of Alex Eckelberry from Sunbelt Software, “They are going to kill their competition through predatory pricing.”
This will then lead to two probable outcomes: First off, Microsoft will become a monopolist when McAfee and Symantec exit, which will allow them to charge higher prices because they will be the only internet security provider on the market. The other consequence is that this creates a large barrier to entry, which reduces the incentive for Microsoft to innovate its OneCare for future security threats. This would lead to hackers invading our privacy and threatening our security on the web.
Hopefully, antitrust laws can soon come into play in order to stop Microsoft from monopolizing the market in yet another sector.
Posted by: Adam, Amy, Braden and Fabio.
1 comment:
I agree that Microsoft's strategy of underpricing McAfee's and Symantec should raise some concern. However, the evidence provided Eckleberry does not seem persuasive, and seems even harder to prove in court. First of all, for Microsoft to be involved in predatory pricing, it means that it must price below its marginal cost. It seems very plausible that Microsoft may have lower costs because they in fact produced the the OS, and therefore do not have to spend money on R&D. Furthermore, Microsoft could cut down on transportation costs because those customers who buy its other products are also likely to purchase their security software.
The claim that Microsoft's pricing poses a risk to consumers because Microsoft will lose incentive to produce quality products also seems dubious. Microsoft competes with other operating systems like Apple, and so must ensure a good product in order to compete with other competitors. As a result, Microsoft will need to ensure that it provides sufficient security protection.
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