30 sett 1999 anni - Components of Microsoft's monopoly unlike traditional monopoly: "network effects", difficult-to-define "consumer harm"

Descrizione:

"...Briefly, the Department of Justice alleges that Microsoft has monopoly power in the market for personal computer operating systems and that it has engaged in anticompetitive practices to eliminate competitors' browsers as competing platforms for running software applications, thereby unlawfully maintaining its monopoly power. DOJ also alleges that Microsoft has sought to restrict the access of its browser competitors, especially Netscape, to significant channels of distribution, thereby unlawfully restraining competition in the browser market. DOJ further alleges that Microsoft has attempted to obtain a monopoly in the browser market.
Finally, DOJ alleges that Microsoft engaged in an illegal tying arrangement by using its position with regard to operating systems to induce consumers to use a Microsoft browser. Microsoft vigorously denies that it has monopoly power in the market for personal computer operating systems, that its acts or practices were unlawful, and that its actions caused harm to consumers.

Monopoly Power
...When does a firm have "monopoly power" in the market for a high-tech product? Courts have defined monopoly power to be "the power to control prices or exclude competition."Because monopoly power is difficult to measure directly, courts have used market share as indirect evidence of the existence of monopoly power. Microsoft allegedly has an 80% or more share of the market for personal computer operating systems, and courts typically have concluded that a 70% or more market share creates an inference of monopoly power absent evidence that overcomes that inference.

I think that it is particularly important in antitrust cases involving high-tech to look beyond mere market share to determine whether monopoly power exists. On the one hand, in antitrust cases involving high-tech much has been made of the theory that a firm's market power may be durable because of what are known as "network effects."

Network effects essentially mean that certain products become more useful as more and more people come to use them. Simple examples are telephones and fax machines, both of which became more useful with increased use. The theory underlying network effects is that once consumers become "locked-in" to a product incorporating the current technology, they may be reluctant to switch to another product with a superior technology because of the premium associated with the widespread use of a common technology. Since network effects may make consumers less likely to switch, a firm with a high market share that makes a product including the current technology may be more likely to have monopoly power.

On the other hand, experience teaches that the normal operation of economic incentives in dynamic high-tech markets generally will spur advances in technology that cause consumers to switch to a superior new technology in spite of network effects. For example, in the early 1980s consumers were locked into the technology of vinyl records and turntables, but consumers rapidly switched technologies with introduction of compact disks.

Perhaps the threat of similar technological switches explains why some of the titans of high-tech industry today do not appear to behave like the monopolists of old, for whom "unchallenged economic power deaden[ed] initiative . . . [and] immunity from competition [was] a narcotic."

Consumer Harm
The second issue that I think the Microsoft case and other high-tech antitrust cases raise is whether the alleged unlawful conduct has caused harm to consumers, and not just to competitors. Antitrust law traditionally evaluates whether the conduct at issue has caused or is likely to cause harm to consumer welfare(5) in the form of higher prices, reduced output, and decreased innovation. Markets for many high-tech products have been and continue to be characterized by decreasing prices, increasing output, and robust innovation, often stemming from massive spending on research and development. Such market characteristics do not confer immunity from antitrust challenge on those competing in these markets, but they do transform the relevant questions into whether prices would have fallen even more, output would have increased even more, and innovation would have been even more vibrant in the absence of the alleged antitrust violations.

Remedies
Finally, we need to address the issue of what kinds of remedies should be imposed when firms in high-tech industries are found to have violated the antitrust laws. As I mentioned above, many high-tech markets are characterized by decreasing prices, increasing output, and robust innovation -- certainly characteristics that yield tremendous benefits to consumers. To avoid "killing the goose that lays the golden eggs," remedies should be very carefully calibrated to address demonstrated consumer harm and to prevent violations that are the same as or similar to the violations that caused that harm. Adherence to the Hippocratic oath -- "First, do no harm" -- seems a standard quite applicable to the remedies that should be imposed in antitrust cases concerning high-tech.

The Microsoft case has generated a flurry of debate as to what sort of remedy the court should impose if Microsoft is found liable. Among others, the remedies that have been discussed have included breaking up the company (vertically or horizontally), mandating that the company allow access to its operating system technology, and prohibiting the company from using certain contractual provisions. One suggested remedy recently caught my eye. Under the heading "Wheel of Fortune," John McCaslin of the Washington Times offered a snippet reporting that David Boies, DOJ's lead trial attorney, had told British consumers that they might receive checks as part of the relief ordered.(7)

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