Microsoft's Five Fatal Flaws
43 Pages Posted: 4 Jul 2009 Last revised: 24 May 2012
Date Written: July 3, 2009
The recent decision of the European Court of First Instance ("CFI") in an antitrust case brought against Microsoft has exposed a deep transatlantic divide about the appropriate level of scrutiny brought to bear on the unilateral conduct of a dominant firm. In its decision, the CFI required Microsoft to share valuable intellectual property ("IP") with its smaller rivals, under circumstances that would create no such obligation in the United States. In addition, the court effectively imposed per se liability for bundling conduct - an approach explicitly rejected by the Court of Appeals for the District of Columbia in an earlier, unrelated proceeding against Microsoft.
A superficial comparison of the U.S. and European Commission ("E.C.") actions would reveal an asymmetry concerning their respective views of the presumed anticompetitive effect of bundling and refusals to deal. A deeper analysis, however, reveals that the chasm is both more extensive and fundamental than might initially appear. Although U.S. antitrust law has long approached claims of single firm misconduct with far greater skepticism than Europe - a departure explained in significant part by the European ordoliberal tradition and greater incidence of dominance caused by privatization of formerly state-run monopolies - Microsoft has revealed a more significant disparity regarding an issue of the utmost economic importance. This issue involves the treatment afforded sellers of intellectual property, whose success leads them to economic monopoly as it casts their rivals to the fringe of the market. The question of whether the antitrust laws should require dominant owners of intellectual property to share it with their less successful rivals in order to facilitate a more "competitive" market structure is perhaps the most fundamental facing the field today. The CFI's opinion in Microsoft answered this question affirmatively, taking a position in marked contrast to the U.S. view.
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