A Critical Appraisal of Remedies in the EU Microsoft Cases

Abstract

We discuss and compare the remedies in the two cases antitrust cases of the European Union (EU) against Microsoft. The first EU case alleged (i) that Microsoft illegally bundled the Windows Media Player (WMP) with Windows; and (ii) that Microsoft did not provide adequate documentation that would allow full interoperability between Windows servers and non-Microsoft servers as well as between Windows clients and non-Microsoft servers. After finding Microsoft liable and imposing a large fine, the EU imposed as remedies the requirements on Microsoft (i) to sell a version of Windows without WMP (Windows-N); and (ii) to publish and license interoperability information. Windows-N was a commercial failure, and there has been only limited cross-platform server entry. In its second investigation of Microsoft, the EU alleged illegal tying of Internet Explorer (IE) with Windows. The EU settled with Microsoft with Microsoft undertaking the obligation to ask (through compulsory Windows updates) consumers whose computers have Internet Explorer pre-installed to choose a browser from a menu of competing browsers. Thus, the EU imposed quite different remedies in the two cases: an unbundling remedy for the WMP but a close to a must-carry requirement for IE. We analyze and compare the different approaches.

Keywords: antitrust, remedies, Microsoft, complementarity, innovation, efficiency, monopoly, oligopoly, media player, interoperability, Internet browser

JEL Classification: K12, L12, L13, L41, L42, L63