TechWeek: More Microsoft Grumblings

Is Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) up to its old anticompetitive tricks again? If you believe Alex Eckelberry, CEO of Sunbelt Software, a privately owned purveyor of antispyware, the answer is a resounding yes.

"It's bad enough that Microsoft is getting into all aspects of security. But now they are going to kill their competition through predatory pricing" [italics mine], Eckelberry said in his blog this week.

That's a serious charge. Predatory pricing has a fairly specific meaning: It is the practice of a dominant firm selling a product at a loss in order to drive some or all competitors out of the market.

Eckelberry, whose claim was widely circulated in the trade press, obviously knows this, and he went on to liken Microsoft's practices in the security market to Standard Oil's monopoly in the early part of the last century.

"We already know that Microsoft loses money on most of its business (it primarily makes money on the operating system). But now we see that Microsoft is endangering the entire security ecosystem with ruthless, Standard Oil-style pricing," he says.

Before looking at the pricing claim, it's worth noting that Eckelberry is wrong about Microsoft's business model. The software giant makes big bucks in many areas beyond the OS, including the Office franchise and its rapidly growing database business.

Eckelberry looks at retail pricing for Symantec's(SYMC Quote - Cramer on SYMC - Stock Picks) Norton Antivirus suite and McAfee's(MFE Quote - Cramer on MFE - Stock Picks) VirusScan, and concludes that Microsoft "has priced themselves almost 50% below the market leader, and no one has said a peep."

And looking at the enterprise market, Eckelberry concludes that Microsoft has undercut Symantec, McAfee and Trend Micro(TMIC Quote - Cramer on TMIC - Stock Picks) by an average of 58%.

So, is Microsoft going back to court? Not likely. A foundation of antitrust law is the principle that competition benefits the consumer. And even a superficial analysis indicates that Microsoft is making the market more -- not less -- competitive.

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