Sunday, September 16, 2007

Microsoft and Antitrust in America and in the World

Posted by Bill Page and John Lopatka

For the next few days, we’ll be blogging here about Microsoft and antitrust. In part, we’ll write about our new book, The Microsoft Case: Antitrust, High Technology, and Consumer Welfare (University of Chicago Press 2007), which focuses on the 1998 government monopolization case and the follow-on private litigation in the United States. But we’ll also certainly have some things to say about today’s long-delayed decision of the European Court of First Instance in the European Microsoft case, which we are now scrutinizing. In the book, we call the U.S. litigation “the defining antitrust case of our era” and predict that “it will be the focus of scholarly discussion about the proper role of antitrust for years to come.” The differences between the U.S. and European enforcers on “the proper role of antitrust” highlight the continuing importance of the policy issues that Microsoft’s actions raise.

Our starting point is that antitrust should be guided by the consumer interest and should acknowledge the limitations of government in directing market outcomes, particularly in fast-moving markets. We would place a higher burden than some on the government to show that its actions will really improve conditions for consumers more than the forces of rivalry and innovation. As we show in our first chapter, the government’s checkered history in monopolization cases, particularly in its pursuit of structural and highly regulatory remedies, justifies our relatively circumspect approach. Throughout the book, we criticize both enforcers and courts in the Microsoft litigation for their decisions, although we find much to support in the ultimate resolution of the case. We agree, for example, with the D.C. Circuit’s rejection of liability for those aspects of Microsoft’s conduct that most obviously benefited consumers, particularly the provision of new products and services at attractive prices. On the other had, we criticize the court for failing to demand adequate theoretical and evidentiary support for the conclusion that Microsoft actually harmed consumers by integrating the Internet Explorer browser with Windows. We generally support the remedial approach of the final judgments in the case, although we have more recently criticized the protocol licensing requirement, which will remain in effect after the rest of the decree expires in November. See Software Development as an Antitrust Remedy: Lessons from the Enforcement of the Microsoft Communications Protocol Licensing Requirement.

More later.

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