Microsoft and Google: A Recap (Jaideep Venkatesan)

So much has happened between Microsoft and Google, a recap seems to be in order.

Microsoft launches Bing , replacing its moribund Live Search.

Google announces the development of the Google Chrome Operating System.

Microsoft announces that it will offer a a free online web version of its Office applications, which will compete with Google Docs for hosted software applications.

Note the antitrust issues raised in the Google OS release. The FTC is currently investigating Apple and Google under little-used section 8 of the Clayton Antitrust Act.
Michael Arrington's interviewed Gary Reback , author of the excellent book Free the Market! about his experience in antitrust issues in the technology industry over the past thirty yeares. Arrington and Reback discussed some of these issues. Reback argued that even though the DOJ's civil actions against Microsoft did not result in a concrete remedy, they achieved their purpose by spurring competition among browsers. A large share of the credit for this competition is due Mozilla and its Firefox browser. The New York Times examines the impact of Google's entry in the browser and operating system spaces on the future of Mozilla.

There is also a good analysis of the Microsoft-Google battle in CNN - Google vs. Microsoft: What you need to know.

The upshot of most te analysis is that Microsoft and Google are battling for position on the "webtop", when businesses and consumers move away from locally owned storage and memory to computing on the cloud. While it is not clear how it will shake out for either company, consumers are likely to benefit from increased competition in browsers, operating systems, and web applications.

Financial Reform and Venture Capital (Jaideep Venkatesan)

Last month, President Obama unveiled his plan for financial regulation. The administration's
draft included a provision to bring "private pools of capital" under regulation, potentially subjecting venture capital funds to disclosure requirements, margin and reserve limitations, and other regulations that govern traditional banks and bank alternatives.

Financial reform bringing "shadow banking" under regulation is essential to prevent a replay of the financial crisis of 2008 that froze credit and ushered in the current recession/depression. However, it is an open question as to whether venture capital funds function in a manner similar to banks and pose the same systemic risks if left unregulated.

The National Venture Capital Association wasted no time in opposing the financial regulatory plan. The Association made the boilerplate opposition to financial regulation typical of the Washington Consensus. Given the current plunge in Venture capital funding, poorly designed regulation can exacerbate the economic downturn. Nonetheless, the current crisis requires a financial overhaul, and given the importance of venture capital funding to technological innovation and the economy, it should not be left out of the new financial regulatory regime.