Legal and Economic Analysis of a Transatlantic Antitrust Case
Edited by Luca Rubini
Chapter 11: Economic Aspects of the Microsoft Case: Networks, Interoperability and Competition
Maria J. Gil-Moltó 1. INTRODUCTION Microsoft has been under scrutiny of both the Department of Justice in the United States and the European Competition Commission in the European Union in two complex cases that spanned over a number of years. These cases have been followed with great interest by economists, both academic economists and practitioners, all around the world. This is perhaps due to the fact that the computing industry is an industry in which a number of economic arguments such as network effects, complementarities and R&D incentives interplay and affect the effective level of competition. In fact, there is a feeling among economists that we can learn a lot about strategic behaviour in rapidly changing environments by understanding Microsoft’s strategies.1 In the EC case, two of Microsoft’s strategies were investigated: first, Microsoft’s refusal to supply the essential information to make Sun Microsystems’s work group server operating system, Solaris, compatible with Windows. This investigation followed the formal complaint by Sun Microsystems to the European Commission, in which it accused Microsoft of behaving anti-competitively by denying this necessary information. Microsoft was accused of trying to reduce the interoperability of Windows with other products produced by competitors in order to leverage its market power in the PC operating systems market onto the work group server operating systems market, a market in which Microsoft was also active. The second issue involved in the case was Microsoft’s practice of tying Windows Media Player (WMP) with Windows operating system, two 1 D. Carlton, ‘The...
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