New Economy Forum Briefing
J. Bradford DeLong
http://www.j-bradford-delong.net/
delong@econ.berkeley.edu
May 2000
The New Economy and Antitrust I: Microsoft
- Monday, Federal Judge Thomas Penfield Jackson
has found as a matter of law that Microsoft has violated the
110-year-old Sherman Antitrust Act.
- The judge's findings--of fact and now of
law--have been very carefully crafted to severely diminish the
potential for higher courts to overrule his findings.
- The judge's findings of law are intimately
tied to his findings of fact, and higher courts must pay enormous
deference to his findings of fact.
- Hence higher courts must either uphold the
judge, or overturn long-established and hitherto-unchallenged
antitrust precedent
- Does this decision matter? Five years ago,
Microsoft, with its dominance of desktop operating systems and
productivity applications, was the heart of America's high-tech
economy. But today the heart is the network--UUNet, Akamai, Oracle,
AOL, Apache.
- The Justice Department's theory is that Microsoft
is trying to construct a web of dependencies between its products--Windows,
Office and Outlook, Explorer, IIS,
FrontPage, and others--so that each works much better with the
other than it does with their competitors' products.
- Most recent news: Microsoft's restricted
Kerberos implementation.
- The Justice Department had tried to fix this
by saying that Microsoft could integrate but not bundle
products.
- Microsoft got around this in Windows 95 by
moving dynamic link libraries, and then declaring that Windows
and Explorer were not "bundled" but "integrated."
The Appeals Court bought it.
- Thus the Justice Department now faces a problem:
conduct restrictions it imposes may well be undermined by the
DC Circuit.
- What to do?
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Professor
of Economics J. Bradford DeLong, 601 Evans Hall, #3880