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We talked about Microsoft’s (MSFT) recent entry into the security software market a few weeks back. While we noted that Symantec (SYMC) and McAfee (MFE) appeared concerned, we also questioned whether consumers would pay Microsoft to defend against viruses and worms exploiting Microsoft’s one Windows operating system. It appears to create a moral hazzard for Microsoft - do they improve Windows or let it stay buggy so they can sell more security software?

Recently it became clear that Symantec and McAfee weren’t the only ones concerned. Some channel partners and competitors have vocally alleged that Microsoft is pricing its new OneCare suite at predatory levels.

Techdirt weighs in.

For some time there’s been concern about how Microsoft’s push into security software might square with its reputation (and conviction) as a monopolist…. There’s no doubt that Microsoft does want to take shots at its competitors — that’s what all businesses do. What’s funny though is that the argument boils down to the fact that OneCare is too good of a deal, that its licensing terms are too flexible, and that a software package of its caliber just shouldn’t be so affordable. All this sounds pretty good for consumers, whom the law should ultimately be designed to protect. If security software is such a commodity that price is the only concern for customers, then the price should be dropping.

In addition to the direct concerns about pricing, the company argues that Microsoft will establish a monopoly in the space, and that investment in new research and startups will dry up. One reason this isn’t likely is that security software doesn’t lend itself to a natural monopoly the way an OS does (not to mention the fact that the vaunted Windows monopoly itself is seen as weakening).

Besides, wasn’t the antitrust argument always that they were trying to kill competition so they could turn around and raise prices? How much did you pay for your last Internet Explorer download? Then, as soon as IE quit being adequate for many users, Firefox was developed.

No, we say to hell with the antitrust argument. The moral hazard is the more compelling case here.

MSFT-MFE-SYMC 1-yr comparison chart:

MSFT-MFE-SYMC 1-yr comparison chart

Source: Microsoft’s ‘Predatory’ Pricing in the Security Software Market (MFE, MSFT, SYMC)