ICYMI: The Enduring Potency of US v. Microsoft
The landmark 2001 decision in United States v. Microsoft Corp. serves as the basis for antitrust enforcement in the modern information age. The case shows that the current antitrust framework is capable of addressing anticompetitive conduct in today’s technology and digital markets. In fact, making substantive changes to competition laws would risk long-term harm to consumers by deviating from an evidence-based and economically sound antitrust framework. A new white paper from CCIA—The Enduring Potency of the Microsoft Decision—breaks down the decision to demonstrate its enduring relevance. Highlights from the paper include:
— The antitrust framework can be adequately applied to novel issues in today’s technology markets.
— Current antitrust laws are well-suited to protect both consumers and innovation.
— Antitrust enforcers across the political spectrum endorse the framework used in the Microsoft decision.
The antitrust framework can be adequately applied to novel issues in today’s technology markets.
Acknowledging that current antitrust laws are sufficient and there is danger in constantly updating these laws, the Microsoft court provides an analytical framework to analyze fast-changing technology markets. “The structural approach, as applied by the District Court, is [ ] capable of fulfilling its purpose even in a changing market,” the decision reads. The court also noted “the important role in curbing infringements of the antitrust laws in technologically dynamic markets” given that “the Government will continue to have an interest in defining the contours of the antitrust laws so that law-abiding firms will have a clear sense of what is permissible and what is not.”
Existing exclusionary conduct doctrine can be applied to technology markets. The decision in the Microsoft case clarified that the principles at the foundation of exclusionary conduct cases that were based on “a century of case law on monopolization” can be applied to technology markets. While technology industries operate in dynamic and fluid markets, the established framework remains valid.
Current antitrust laws are well-suited to protect both consumers and innovation.
The court emphasized that protecting pro-consumer innovation is a priority. The decision explains: “In a competitive market, firms routinely innovate in the hope of appealing to consumers, sometimes in the process making their products incompatible with those of rivals; the imposition of liability when a monopolist does the same thing will inevitably deter a certain amount of innovation. This is all the more true in a market, such as this one, in which the product itself is rapidly changing.”
Consumer welfare remains the standard by which anticompetitive behavior is measured—even if one or more rivals is allegedly harmed. “To be condemned as exclusionary, a monopolist’s act must have an ‘anticompetitive effect.’ That is, it must harm the competitive process and thereby harm consumers. In contrast, harm to one or more competitors will not suffice.”
Antitrust enforcers across the political spectrum endorse the framework used in the Microsoft decision.
In 2006, then-FTC Chair Deborah Platt Majoras acknowledged the Microsoft court’s ability to achieve a dual objective of protecting consumers and promoting innovation.Majoras noted that Microsoft “incorporates principles for which there is wide consensus” and achieves a “sensible ‘weighted’ balancing approach.” She praised the decision for avoiding retroactive analysis that would stifle incentives to innovate. As she explains, the court’s decision “[took] care to ensure not to chill procompetitive behavior.”
Former Assistant Attorney General Bill Baer held up Microsoft as an example of an enforcement decision that is “fact-based, analytically sound and legally grounded.” “[S]even judges of the D.C. Circuit Court of Appeals issued a unanimous decision that upheld the key liability determinations against Microsoft for maintaining its monopoly in the operating systems market,” he remarked at the Chatham House Annual Antitrust Conference in 2015.”
Discussing antitrust enforcement in the digital era, Assistant Attorney General Makan Delrahim pointed to Microsoft to demonstrate the adaptability and longevity of antitrust frameworks. “Over the past several decades, antitrust law has responded to new and innovative products and markets to protect against novel threats to the competitive process. Enforcement agencies have developed a strong expertise as new types of assets emerge and consumer preferences shift, and have brought successful antitrust challenges to dismantle barriers to competition.”