Competition, Innovation and the Microsoft Monopoly: Antitrust in the Digital Marketplace: Proceedings of a conference held by The Progress & Freedom Foundation in Washington, DC February 5, 1998Jeffrey Eisenach, Thomas M. Lenard Do the antitrust laws have a place in the digital economy or are they obsolete? That is the question raised by the government's legal action against Microsoft, and it is the question this volume is designed to answer. America's antitrust laws were born out of the Industrial Revolution. Opponents of the antitrust laws argue that whatever merit the antitrust laws may have had in the past they have no place in a digital economy. Rapid innovation makes the accumulation of market power practically impossible. Markets change too quickly for antitrust actions to keep up. And antitrust remedies are inevitably regulatory and hence threaten to `regulate business'. A different view - and, generally, the view presented in this volume - is that antitrust law can and does have an important and constructive role to play in the digital economy. The software business is new, it is complex, and it is rapidly moving. Analysis of market definition, contestibility and potential competition, the role of innovation, network externalities, cost structures and marketing channels present challenges for academics, policymakers and judges alike. Evaluating consumer harm is problematic. Distinguishing between illegal conduct and brutal - but legitimate - competition is often difficult. Is antitrust analysis up to the challenge? This volume suggests that antitrust analysis `still works'. In stark contrast to the political rhetoric that has surrounded much of the debate over the Microsoft case, the articles presented here suggest neither that Microsoft is inherently bad, nor that it deserves a de facto exemption from the antitrust laws. Instead, they offer insights - for policymakers, courts, practitioners, professors and students of antitrust policy everywhere - on how antitrust analysis can be applied to the business of making and marketing computer software. |
Contents
Introduction and Overview | 1 |
Antitrust in the Digital Age | 19 |
Antitrust in Software Markets | 29 |
Is Heightened Antitrust Scrutiny Appropriate for Software Markets? | 81 |
Using Leverage to Preserve Monopoly Discussion of Katz and Shapiro Paper | 91 |
Access and Bundling in HighTechnology Markets | 101 |
Comment on Ordover and Willig | 127 |
Microsoft And Browsers Are the Antitrust Problems Really New? | 135 |
New Modes of Competition Implications for the Future Structure of the Computer Industry | 153 |
Competition Compatibility and Vertical Integration in the Computing Industry | 207 |
Microsofts Use of Zero Price Bundling to Fight the Browser Wars | 215 |
Digital Convergence? | 253 |
Comment on Flamm | 289 |
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analysis anticompetitive antitrust enforcement antitrust laws antitrust policy application software applications programs barriers to entry bottleneck bottleneck-holder browser market browser software browser supplier browser wars Compaq competing browser competitors complementary components computer industry consumers contract customers DBMS decline desktop dominant firm economic efficiency entrant example exclusionary exclusive Flamm hardware important incentive industry structure innovation installed base intellectual property interfaces Internet Explorer issues Java layers licensing marginal cost market power market shares merger Microsoft Microsoft's bundling monopoly power Netscape network computer network effects network externalities non-coincident market OEMs offer operating system operating system software Ordover package percent personal computer platform potential practices price discrimination price index profits railroad rival seller semiconductor set-top box Shapiro shelf space software industry software markets standard setting strategy switching technical telecommunications theory tying users vendor vertical integration Windows 95 zero price