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Two approaches to arguing the 1969 IBM antitrust case

August 16th, 2017 No comments

My search for software engineering data has made me a regular customer of second-hand book sellers; a recent acquisition is: “Big Blue: IBM’s use and abuse of power” by Richard DeLamarter, which contains lots of interesting sales and configuration data for IBM mainframes from the first half of the 1960s.

DeLamarter’s case, that IBM systematically abused its dominant market position, looked very convincing to me, but I saw references to work by Franklin Fisher (and others) that, it was claimed, contained arguments for IBM’s position. Keen to find more data and hear alternative interpretations of the data, I bought “Folded, Spindled, and Mutilated” by Fisher, McGowan and Greenwood (by far the cheaper of the several books that have written on the subject).

The title of the book, Folded, Spindled, and Mutilated, is an apt description of the arguments contained in the book (which is also almost completely devoid of data). Fisher et al obviously recognized the hopelessness of arguing IBM’s case and spend their time giving general introductions to various antitrust topics, arguing minor points or throwing up various smoke-screens.

An example of the contrasting approaches is calculation of market share. In order to calculate market share, the market has to be defined. DeLamarter uses figures from internal IBM memos (top management were obsessed with maintaining market share) and quote IBM lawyers’ advice to management on phrases to use (e.g., ‘Use the term market leadership, … avoid using phrasing such as “containment of competitive threats” and substitute instead “maintain position of leadership.”‘); Fisher et al arm wave at length and conclude that the appropriate market is the entire US electronic data processing industry (the more inclusive the market used, the lower the overall share that IBM will have; using this definition IBM’s market share drops from 93% in 1952 to 43% in 1972 and there is a full page graph showing this decline), the existence of IBM management memos is not mentioned.

Why do academics risk damaging their reputation by arguing these hopeless cases (I have seen it done in other contexts)? Part of the answer is a fat pay check, but also many academics’ consider consulting for industry akin to supping with the devil (so they get a free pass on any nonsense sprouted when “just doing it for the money”).

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