Assessing Microsoft from a Distance

Abstract:     
A careful review of the evidence that was available at the time Microsoft was litigated and has accumulated since indicates that the conduct by which Microsoft was found to have unlawfully preserved monopoly power in personal computer operating systems was largely ineffectual. The entry barrier that Microsoft supposedly maintained through exclusionary conduct has eroded substantially, but not because of the conduct restrictions imposed by the remedial orders. Rather, the market has evolved as technology has progressed. Nevertheless, various Microsoft officials intended at least some of the conduct challenged simply to injure competitors, and the government relied upon evidence of that intent and a theory of possible competitive harm in bringing its case. Intent evidence can sometimes be helpful in determining the economic nature of objectively ambiguous practices. But rational actors may engage in conduct unlikely to return monopoly profits and unlikely to reduce economic welfare because it might do so and is cheap. Given the high cost of antitrust enforcement, attacking potentially anti-competitive conduct merely because the actor can engage in it at low private cost is unlikely to serve the public interest.

Number of Pages in PDF File: 36

Accepted Paper Series