Don’t Be a Software Giant in Europe! ⎯ A Critical Analysis of Microsoft v. Commission

 

Title
Don’t Be a Software Giant in Europe! ⎯ A Critical Analysis of Microsoft v. Commission
Author
Kuo-Lien Hsieh
Keywords
The Microsoft Case, Trade Secrets, Abuses of Dominant Positions, Interoperability Information, Indispensable Products or Services
Abstract
The Microsoft judgment concern three software markets, namely the markets
of client PC operating systems, work group server operating systems, and streaming
media players. Microsoft had dominance in the first two markets. Microsoft
was found to have been engaged in two abuses. First, Microsoft refused to offer
interoperability information to its competitors in the work group server operating
systems market. Second, Microsoft tied the sales of the Windows Media Player
software to those of the Windows client PC operating systems. This Article has
analysed the significant flaws of the reasoning adopted by the Court in the Microsoft
judgment. As to the first abuse, it should be emphasised that, first, the “risk doctrine” should not have been employed to judge whether any effective competition
was excluded. No clear causal link exists between the refusal of Microsoft and
elimination of effective competition on the relevant market. The Court should have,
at very least, looked at the market shares that Microsoft had gained, if any, during
the years prior to March 2004. Second, the “new product doctrine” developed by
the Court is flawed. This doctrine focuses only on whether the refusal of Microsoft
would appreciably reduce the incentives of Microsoft’s competitors to develop new
products. The Court did not realize that making the interoperability information
available to the competitors of Microsoft would reduce Microsoft’s incentives to
develop new products. As regards the second abuse, the Court overestimated the
effect of the fact that Microsoft offered OEMs, for pre-installation on client PCs,
only the version of Windows bundled with Windows Media Player. As to the
judgment of whether the competition on the streaming media player market was
foreclosed, the Court should have considered whether the tying in question had
previously resulted in substantial negative impact, excluding competition on the
market. The analysis in this Article indicates that it is doubtful whether Microsoft
has diminished the competition on the relevant markets. What is certain is that first,
the Microsoft judgment has significantly reduced the economic incentives of software
market leaders in Europe. In the circumstances where most successful hightech
enterprises refuse to become as successful as they can be, the industry and
consumers will eventually suffer. Second, the judgment, most unfortunately, discourages
the competitors of Microsoft from competing with this software giant.
Abstract Article

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