Friday, January 12, 2007

Thoughts on Microsoft

Posted by D. Daniel Sokol

Classes at Wisconsin begin on Tuesday, which is also the first meeting of my seminar on international and comparative antitrust.  One class will focus on comparative Microsoft cases in the US, EU, Japan and Korea.  Just as I thought that the scholarship on the US Microsoft saga was complete (and my syllabus set), Harry First and Andy Gavil have just posted an excellent working paper on SSRN that provides an interesting and heretofore unexplored angle.

"Re-Framing Windows: The Durable Meaning of the Microsoft Antitrust Litigation"
NYU Law School, Public Law Research Paper No. 06-39
NYU Law and Economics Research Paper No. 06-55
Utah Law Review, 2006
ABSTRACT: The success, failure, and durable meaning of major antitrust cases often turn on how they are framed before the courts and the public. In the Microsoft monopolization litigation, the government plaintiffs framed the case as one in which Microsoft sought to extinguish the threat to its Windows monopoly with a comprehensive strategy of using monopoly power to exclude potential rivals, rather than succeeding through superior products. In decided contrast, Microsoft argued that the government plaintiffs, acting at the behest of losing competitors, were attempting to interfere with a dynamic and continually evolving industry, one in which Microsoft actually faced potent competitive threats.

For a time the plaintiffs' narrative was ascendant. The narrative began to lose ground, however, when a new administration took office in Washington and settled the case on terms that were unlikely to bring competition to the market in which Microsoft had improperly maintained its monopoly. The re-framing of the Windows case was underway. In this article we trace the reframing process. We begin by reviewing the original trial and appellate court decisions, upholding the core of the plaintiffs' case. We show how the seeds for reframing, planted in the court of appeals' decision, were subsequently used by the Justice Department to justify a settlement. We then review the settlement decree's administration to demonstrate how disappointing its results have been. Indeed, the government that once prosecuted Microsoft has now come full circle to defend many of Microsoft's core business strategies and to criticize antitrust enforcement agencies elsewhere in the
world that are still attempting to stop Microsoft's exclusionary conduct. As Microsoft has been reframed, the case has thus become a vehicle for redirecting antitrust doctrine and enforcement away from the problems of monopoly, especially in the new economy, in part by demeaning the value of government antitrust enforcement.

The history of the public prosecution of Microsoft reminds us that major monopolization cases are important to bring but politically difficult to manage to successful conclusion. If the effort to reframe the Microsoft case succeeds, our concern is that the already limited public power available to pursue private power in the public interest will be circumscribed and the historic role of the government to challenge competition-related abuses of private power may be crippled.

Update- January 15

Harry First has alerted me to another Microsoft article of his, this one forthcoming in the Wisconsin Law Review.  Extra points for publishing with  UW!

Download hfirst_microsoft_and_the_evolution_of_the_intellectual_property_concept_print_version.pdf

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