Microsoft: Predator or Prey?

Abstract

In February, the European Competition Commission fined Microsoft $1.35 billion in what was just the latest in a long line of antitrust cases against the company. Ironically, though, whatever market power Microsoft possessed was already ebbing by the time the company became mired in legal battles with regulators over which software applications could be bundled with operating systems. The real story here is the ever-briefer period in which companies with clear leads in technology and marketing seem able to sustain the advantages. Treating Microsoft, Google, and their successors like the monopolists of yore would be a real loss to advanced industrial economies, which are increasingly dependent on rapid technological change to sustain growth. As a consequence, antitrust policy built around traditional tests of market power are at best a way to keep lawyers well remunerated and, more likely, a significant barrier to productive change.