Microsoft plays hardball

August 1, 2013

By Bruce Baer Arnold

You can tell a lot about an organization culture and view of the world by looking at what it says about its competitors.

Some enterprises, just like some politicians and academics, are serene. They don’t engage with the trolls. They don’t badmouth their rivals, either because they are confident or because visceral criticism is bad corporate manners. They don’t shout.

Others signal that they are in trouble by denigrating their competitors. Microsoft’s current anti-Google advertising campaign in the US raises questions about where Microsoft is going and about regulation of “negative campaigning”.

Microsoft and Google are increasingly operating in the same markets. Both have hardware arms and licensing deals, both offer network services, both have search engine services, both offer browsers, both have been criticized for disregard of privacy concerns.

This year Microsoft has been running a series of advertisements warning consumers in the US that Google doesn’t care about their privacy. The denigration is presumably meant to erode Google’s “do no evil” persona and encourage regulators to crimp its growth, particularly in Europe where Google has thumbed its nose at privacy watchdogs.

The campaign reflects the US market’s tradition of astroturfing and pit-bull “attack” advertising, the same “knock-em-out” ads apparent in US elections featuring claims that candidates are keen on terrorists, child-molesters, murderers and other hate figures. The ads haven’t figured in Europe, arguably because of consumer distaste rather than stronger regulation.

Slamming an opponent isn’t out of character for Microsoft, which has a history of pushing the regulatory envelope for behaviour deemed to be anti-competitive. That aggression is one reason for its success. What we’re now seeing are recurrent doubts about Microsoft’s future as the world moves towards cloud computing and away from the traditional PC. Microsoft’s attacks may be intended primarily to reinforce its share price (higher last week despite slow growth in some sectors), given the importance of retaining experts whose remuneration is based on equity rather than the fortnightly pay check and being able to acquire innovative startups.

In essence, Microsoft is behaving like a large IT corporation… business as usual.

We might of course want Microsoft and Google to play by different rules. Google’s underpinned its growth through its underdog image and ‘do no evil’ rhetoric. The attack ads are a reminder of reality: two very large corporations whose continuing success and existence are not guaranteed.

One foundation of commercial success is trust. That trust may dissipate if consumers perceive the campaigning as symptomatic of ruthless corporations and pots calling kettles black.

Just as importantly, badmouthing can boomerang. Microsoft does not have a great reputation for customer care. It has been criticized for a disregard of consumer privacy. Highlighting problems at Google won’t erase consumer (and regulator) suspicions about Microsoft’s performance.

We could establish legal frameworks to protect corporate reputation, similar to protection under defamation law. They are open to abuse and should be avoided. We might instead rely on consumers. Unhappy with statements by a corporation – or by the attention-seeking Mr Jones? Express your unhappiness to its board. Importantly, shape corporate behavior by depriving offenders of your dollars. Don’t listen to Jones. Don’t buy the products. Wallets can persuade offenders to “play nicely”.

Mum’s advice about getting on with other kids is a better solution than new law or a toothless non-government “truth in advertising” regulator.

Bruce Baer Arnold (University of Canberra) does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published at The Conversation. Read the original article.

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