Microsoft Windows XP: What Does It Really Mean for Consumers and the Economy?

    WASHINGTON, Sept. 26 /PRNewswire/ -- Robert W. Hahn, director of the AEI-
 Brookings Joint Center for Regulatory Studies, is available to comment on
 issues raised this morning, Wednesday, September 26, 2001 by Consumers Union
 concerning Windows XP. Hahn can be reached at 202.862.5909.
     Hahn's recent paper, An Analysis of the Costs and Benefits of Delaying the
 Release of Windows XP, (available in full online
 http://www.aei-brookings.org/publications/abstract.asp?pID=164) argues that:
 
     -- Microsoft's critics say that the company's new operating system
 threatens competition in much the same way earlier versions threatened the
 Netscape Navigator Web browser - and thus Windows XP's features should be
 regulated as part of the remedies imposed in any antitrust settlement.
 However, in the antitrust case, the court's concerns focused on Windows'
 challenge to software that could undermine Windows' role as a platform for
 other software. No new features of Windows XP compete directly with potential
 software platforms.
 
     -- Windows XP will actually increase competition in a variety of software
 niches ranging from electronic photo processing to instant messaging. The
 positive impact on competition is likely to be particular important in instant
 messaging, where AOL Time Warner now dominates and has bitterly resisted
 attempts by Yahoo and Microsoft to crack its near-monopoly.
 
     -- Regulation that delayed Windows XP's distribution in new computers or
 undermined its acceptance by consumers would further harm an industry already
 reeling from the collapse of sales in the information technology sector.
 Computer makers and retailers are depending on XP to stimulate sales of the
 more powerful hardware needed to take advantage of the operating system's new
 features. Similarly, other software companies are pinning their hopes on
 Windows XP to create demand for new or improved products.
 
     Robert W. Hahn is director of the AEI-Brookings Joint Center for
 Regulatory Studies, a resident scholar at the American Enterprise Institute,
 and a research associate at Harvard University. He also served as a senior
 staff member of the President's Council of Economic Advisers for two years.
 Mr. Hahn has written numerous articles and frequently contributes to general-
 interest periodicals and leading scholarly journals including the New York
 Times, the Wall Street Journal, the American Economic Review, the Journal of
 Economic Perspectives, and the Yale Law Journal. He has served as a consultant
 to government and industry on a variety of issues involving regulation and
 privatization.
 
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SOURCE  White House Writers Group