A Critical Appraisal of Remedies in the EU Microsoft Cases

Interoperability and Competition Policy and Antitrust

Article Snapshot

Author(s)

Nicholas Economides and Ioannis Lianos

Source

Columbia Business Law Review, Vol. 2010, No. 2, 2010

Summary

This paper compares the remedies in the two antitrust suits against Microsoft in Europe.

Policy Relevance

The remedies sought in a competition law case should be a good fit with the harm that the dominant firm has done.

Main Points

  • As a result of the European Union’s  (EU’s) first case against Microsoft, Microsoft was required to
    • Sell a version of Windows without Windows Media Player, which was not a commercial success. Requiring Microsoft to offer media players other than its own, and allow the customer to choose, would have been better. The EU’s prediction that Microsoft would end up dominating the media player business has turned out to be false.
    • Make interoperability information available for other firms to license, resulting in very limited entry. The Samba license agreement was the key outcome.
    • Pay a large fine, though this might not have had much effect compared to the private lawsuits against Microsoft allowed in the United States.
  • As a result of the EU’s second case against Microsoft, Microsoft was required to deploy a “choicescreen” to ask consumers to choose a browser from a menu of competing browers.
    • This is similar to the remedy imposed in the United States, which will let equipment vendors decide which to distribute.
  • Competition law remedies are intended to restore the position of those harmed by anticompetitive acts, but not to restore perfect competition, which would rarely be possible.
  • In the United States, Microsoft’s acts were seen as attempts to preserve dominance in operating systems. In Europe, they were seen as attempts to extend dominance to applications.
  • Competition law should require a firm to offer competing products (“must carry”) only if they can prove that the firms’ platform is an essential facility.
  • A remedy proposed in the United States, breaking up Microsoft into more than one firm, would have been very disruptive and likely to harm consumers and the computer industry. A proposal to require the government to use open source software instead of Microsoft products would have been problematic. But Brazil and German oped source preferences might have played a role in encouraging Microsoft to support interoperability.
  • Turning the development of software standards over to a standard-setting organization would have slowed innovation.

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