ACADEMIC ARTICLE SUMMARY
Microsoft: A Remedial Failure
Article Source: Antitrust Law Journal, Vol. 75, Issue 3, pp. 739-772, 2009; conference paper from the Searle Symposium, “The End of the Microsoft Antitrust Case?” Nov. 15-16, 2007
Publication Date:
Time to Read: 2 minute readWritten By:
Carl ShapiroTAP Scholar
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ARTICLE SUMMARY
Summary:
This article assesses the outcome of the antitrust suit against Microsoft.
POLICY RELEVANCE
Policy Relevance:
The decree intended to restore competition after the antitrust suit against Microsoft was far too weak, and has failed.
KEY TAKEAWAYS
Key Takeaways:
- The antitrust suit against Microsoft, which culminated in a consent decree enter in 2002, was intended to deny Microsoft the profits from its power, end the monopoly, and restore competition.
- Microsoft acquired its monopoly legally, but illegally sought to squelch potential competition from Netscape and Java. The remedy needed to restore potential competition by lowering entry barriers for applications likely to compete with Microsoft.
- Generally, private antitrust suits and awards of damages ensure that firms like Microsoft do not profit from illegal acts and compensate consumers.
- Injunctions requiring Microsoft to give rivals access to its works protected by copyright, trade secret, or patent law are the ideal way to restore competition, because information can be shared by many without taking away others’ ability to use it.
- The Microsoft remedy was too weak because it:
- Simply barred Microsoft from acting illegally in the future, not enough to repair the harm to competition already done.
- Rejected two strong measures, making Microsoft’s browser Internet Explorer open source and requiring Microsoft to allow another operating system such as Linux to work with its popular “Office” software.
- Charged royalties for access to some of Microsoft’s intellectual property.
- Microsoft still dominates the operating system market today, showing that the remedy has failed.
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About Carl Shapiro
Carl Shapiro is the Transamerica Professor of Business Strategy at the Haas School of Business, and Professor of Economics in the Economics Department, at the University of California at Berkeley. His current research interests include antitrust economics, intellectual property and licensing, patent policy, product standards and compatibility, and the economics of networks and interconnection.
