Oops, They Did it Again: What We Didn't Learn from U.S. v. Microsoft
Larry Downes Consulting Group
October 21, 2011
CPI Antitrust Chronicle, October, 2011 (2)
On Aug 31, 2011, the Department of Justice, joined later by seven state attorneys general filed suit to block AT&T’s pending merger with T-Mobile USA. This article looks back at the antitrust prosecution of Microsoft to see what, if anything, regulators have learned about the dangers of intervening in dynamic, rapidly-evolving technology markets.
To be sure, the Department of Justice has never expressed any regret over the Microsoft case or any other recent antitrust action. But the decision to sue AT&T has plenty of self-interested fans, including AT&T competitors Sprint and Cellular South as well as advocacy groups in Washington who believe every merger will end the consumer internet as they know it.
Though different provisions of antitrust law apply to the two cases, both lawsuits repeat the same fatal flaws:
A. Both rely on a definition of the “relevant market” that is narrow and static.
B. Both cling to old models of economic analysis better suited for mature industrial age markets than to rapidly-evolving information markets, where new categories of products and services rise and fall in the time it takes to bring a case to appeal.
C. Both cases pursue sweeping remedies with little regard
With U.S. v. AT&T, as Yogi Berra put it so inelegantly, it’s déjà vu all over again. There is, however, one important difference. The market is shifting faster all the time. Even as consumers rush to take the next plunge, regulators are left gasping for breath, fashioning an antitrust case without the necessary ingredients.
Number of Pages in PDF File: 12
Keywords: antitrust, AT&T, T-Mobile, Microsoft, technology industries
JEL Classification: G34, G38, K21, L12, L13, L41, L43, l63, l96, O38Accepted Paper Series
Date posted: October 21, 2012
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