EU's 'Nationalization by Regulation', The

Intellectual Property, Competition Policy and Antitrust and Open Source

Article Snapshot

Author(s)

Ronald A. Cass

Source

Wall Street Journal, June 23, 2009

Summary

This op-ed looks at how Europe is regulating successful firms.

Policy Relevance

Regulating product designs will harm consumers and reduce investment in innovation. Rival firms will focus on lobbying instead of serving consumers.

Main Points

  • European competition regulators seem willing to take over leading firms like Microsoft by regulating their product designs.

  • This degree of regulatory interference has lead Microsoft’s competitors to make continual attempt to use litigation to gain an advantage.
    • Microsoft’s rivals, such as Opera and Firefox, asked that Windows be designed so that consumers must see a screen offering a choice of browsers.

  • Consumers benefit from the convenience of having several services offered together in one package, and demand for these products, e.g. cell phones, is strong.

  • Consumers are free to choose among rival browsers already, and browser makers other than Microsoft are gaining ground.

  • “Tying” is when a firm asks consumers to buy product A when they buy product B. A printer company might insist that you buy their paper along with their printer. This can harm competition.

  • But applying competition rules designed for simple “tying” cases will work poorly in the Microsoft case.
    • Designing a product like Windows is different, because designers face so many complex choices about what consumers get.

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