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09.21.2007

J.DeLong and Google-Microsoft

James DeLong released a clarifying take on Google's US antitrust actions against Microsoft.

The shortcomings of Google's position-

...what is really going on in Google's collective mind? I think it boils down to a couple of things. First, Google and Microsoft are colliding as the tech world evolves, so disrupting Microsoft's plans is its own reward. Second, Google has a dominant position in general Web search. Integrating Web search closely with desktop search would reinforce and extend this power. An effective way to accomplish this is to force Microsoft to do it in the name of "fostering competition."

How Google's actions contrast with the aims of the consent decree-

The weaknesses in Google's argument are that it has nothing to do with the original Microsoft case or with the purpose of the consent order, and that it does not relate to the conditions of the market that have developed in the years since the case ended.

...the very existence of Google renders most of the Microsoft consent order unnecessary. If Google were interested in promoting a competitive desktop operating system, it could create one or it could throw its weight behind Linux. In either case, its weight includes power over Internet search. Mr. Market agrees on the relative power of the two companies, because it gives Google a price-earnings ratio of roughly 46, more than double that of Microsoft.

Google may be a cool company, but the firm's reputation won't mask what its really doing.

An ironist might call this monopoly maintenance by Google. Perhaps antitrust fans can anticipate a U.S. v. Google, in which Exhibit 1 will be the intervention brief.

posted by Noel Le @ 11:34 AM | Antitrust

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09.18.2007

Cox on Microsoft and the EC

Braden Cox from ACT has some insights on the Microsoft antitrust ruling in the EU.

Today’s decision from the European Court of First Instance affirms the broad role that competition policy has in Europe. You can slug through the lengthy court opinion, but these press conference Q&A comments of Neelie Kroes are revealing. They show the true intent of the European Commission’s competition policy regulators: competition policy is about micromanaging software development and dictating market evolution.

The EC is playing a game of catch-up by leveraging industrial policy to hamper a successful global firm.

Cox cites a quote from Nellie Kroes:

I want Microsoft’s market share to diminish to significantly less than 95%. I can’t say that it has to be precisely 50% or whatever number, but it has to be significantly less than 95. - Neelie Kroes, European Commissioner for Competition Policy

And has Kroes carved out the optimal market share for Microsoft competitors?

posted by Noel Le @ 1:44 PM | Antitrust

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08. 5.2007

Intel and AMD Heat it Up

Thomas McCoy, AMD's Executive Vice President, Legal Affairs and Chief Administrative Officer, responds to Solveig on Intel.

In the 2004 Trinko decision, Justice Scalia made a careful distinction: Mere monopoly status is not illegal. But the use of anticompetitive conduct to gain or to maintain a monopoly is illegal, because such practices block the dynamic potential of competition.

This is the distinction employed by the European authorities in their statement of objections against Intel. They did not base their case merely on the size and success of Intel. Rather, the authorities concluded that Intel waged a sustained campaign to leverage its monopoly status to coerce computer makers into boycotting AMD.

Thus, as the European Commission explained, Intel's conduct is “bad for competition and consumers.” And that’s exactly the kind of conclusion that justified the century of landmark U.S. antitrust decisions spanning the decades from Standard Oil, through Alcoa and AT&T, to Microsoft.

Good to see McCoy acknowledge Scalia's distinction that monopolies are not per se illegal nor indication of necessary competition policy enforcement. Antitrust readers will recall this issue was eloquently addressed by Judge Hand- "(t)he successful competitor, having been urged to compete, must not be turned upon when he wins."

A solid review of dominent firm antitrust analysis can be found by Thomas Piraino in Reconciling the Harvard and Chicago Schools, A New Antitrust Approach for the 21st Century, Indiana Law Journal, Vol. 82, Issue 2: 2007.

posted by Noel Le @ 4:00 PM | Antitrust

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07.31.2007

Intel and the EU

More nonsense, explained in, "Intel in Euro-Land", July 31, 2007; Page A14 of the WSJ. Intel is being criticized for offering rebates:

In Europe, a firm's size and success are the determining factors of its alleged violations. The same commercial practices would be entirely legal if the company in question were not considered "dominant." This leaves companies in the absurd position of being free to compete as hard as possible until they reach a certain market share -- at which point their hitherto legal behavior becomes unlawful. This is the kind of reasoning that has damaged the Commission's credibility, as Europe's highest courts overturn one major antitrust decision after another.

posted by Solveig Singleton @ 9:28 AM | Antitrust , International

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06.12.2007

Google, Microsoft, & DOJ in the News

Google has complained about certain features of Microsoft's Vista to antitrust officials. Given the FTC's current investigation of Google's merger with Doubleclick, the company might be wiser to avoid setting off another DOJ feeding frenzy. Antitrust law is a flawed policy instrument at its best, and the hunter easily becomes the hunted. Particularly in the EU.

The New York Times, noting the same complaint, writes on the DOJ's enforcement of the department's consent decree with Microsoft. This is a somewhat peculiar article. It does not mention harm to consumers. The enforcement of the consent decree is seen as an end in itself, and (the alleged) lack thereof as a problem in itself. This ignores the

Continue reading Google, Microsoft, & DOJ in the News . . .

posted by Solveig Singleton @ 11:16 AM | Antitrust

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Microsoft Faces a Double-Front on Antitrust

The Register has an interesting article on Google's antitrust complaints against Microsoft in the US, stating:

The US Justice Department has urged state authorities to reject Google's anti-trust claim against Microsoft. Google complained to regulators that Microsoft's Vista operating system discouraged use of Google search.

I hope Google used a better choice of words with the DOJ than this. Any self-respecting firm would not show itself as so weak and worried about competition that it feels itself harmd because another firm discouraged use of its product.

In other news, Cnet reports that a European Union court will deliver a decision on Microsoft in mid-September to clarify whether the European Commission can pursue its current case with the firm. Apparently, the Commission has put on hold the issuance of new antitrust guidelines for Aritlce 82 of the European Union Treaty. If the Commission has until September to make sense of Article 82, it can at least create a special section to help Nellie Kroes.

Note that the Cnet article describes Microsoft's purportedly anti-competitive actions in Europe as making life difficult and [forestalling] competition for/with competitors. If the European Commission does not already believe the Cnet article trivializes its case against Microsoft, it should.

posted by Noel Le @ 1:19 AM | Antitrust

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05.31.2007

That EU "Innovation" Thing

When my spouse and I were new, new parents and my son was a very new baby, we had some theories about what we "ought" to do. Assorted books and mentors had cautioned us, for example, never to just "let him cry," ever. To get him to sleep we were to stand by him and rub his back, speak softly to him, and on and on. To make a very long story very short, our little guy finally settled down only when we became so utterly sleep-deprived that we abandoned our most cherished theories and focussed on what actually worked--including, sometimes, letting him wail for a few minutes. For a couple of over-educated parents, letting go of the theories was a big deal.

The EU seems to be in the same sort of pickle we found ourselves in. They are wedded to assorted theories of competition, openness, innovation, and an expansive role for government that just are not bringing results. There are examples around the world of successful frameworks for innovation to which they could look. But the EU seems to be the sort of charming, civilized, superior box that it is hard to think outside of. Cut taxes? Free the labor market? Not they. Around and around the box, like so many hamsters clad in little black berets, they pursue Microsoft...

Ian Harvey's "Creativity Destruction," in the WSJ (subscription required) assess the situation thus:

Continue reading That EU "Innovation" Thing . . .

posted by Solveig Singleton @ 8:40 AM | Antitrust , International , Markets: Business, Investment & Innovation

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05. 8.2007

How to Destroy Value for Consumers--EU Antics

The EU continues to issue what one hopes are wild threats against Microsoft. Now EU antitrust authorities have revived the possibility of "structural remedies," that is, breaking Microsoft up. This apparently because Microsoft is seen to be resisting compliance with earlier orders.

Interesting. What is the theory behind this? The focus of antitrust law is supposed to be consumer welfare (not, say, competitor welfare). So the earlier commission orders were supposed

Continue reading How to Destroy Value for Consumers--EU Antics . . .

posted by Solveig Singleton @ 1:43 PM | Antitrust , Software

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04.25.2007

A Parable

Back in the '90s, while I was writing a book on property rights, my day job was writing speeches on energy policy for Charlie DiBona, the very bright head of the American Petroleum Institute.

On one occasion, DiBona met with an important White House staffer, who, it was reported (I was not there), lectured him on the intricacies of oil. DiBona, after listening for a time, informed her that her ignorance was boundless. This upset the API government liaison staff no end, not because DiBona's point was incorrect but because one simply does not tell government officials that they are ignorant fools, especially when this is absolutely true. It might make them testy.

My view at the time, and today, is that businesses have a moral duty to inform government officials when they are living in a fantasy world. Indulging their ignorance or mendacity simply furthers the rot. Furthermore, people who hate you cannot be placated, so why try?

Periodically, I would insert in some draft statement a response to the latest diatribe against "big oil" that went something like:

Senator, you are right. We at big oil feel really bad about supplying the world with the energy it needs to create a civilization. So you have persuaded us, and we have all agreed, to shut down tomorrow. I am sure your constituents will know how to thank you. Or, if this is not what you want, tell us exactly what you do want.

In other words, get real. The API certainly conceded all the complexities and difficulties of balancing energy, environmental, and national security needs, and I argued that it gained nothing by remaining supine while the poliiticians scapegoated it. And the Senator's thanks from his constituents would have involved a rope and a lamp post.

DiBona, lacking the goad of immediate confrontation, would laugh and cut the paragraph. Perhaps properly so; perhaps the time was not ripe. And given politicians' superior access to the press, DiBona figured that the rope and lamp post would be used for oil executives, not Senators.

But now, a decade plus down the road, the level of political ignorance and mendacity has grown apace, and perhaps he would be forced to rethink the issue.

Any relevance to events in the EU described in recent blogs by Solveig and Noel is strictly intentional.

posted by James DeLong @ 8:45 AM | Antitrust

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04.24.2007

Someone has a sense of humor . . .

at Microsoft.

They've asked the European Commission to help set their prices for Windows components.

Continue reading Someone has a sense of humor . . . . . .

posted by Solveig Singleton @ 8:11 AM | Antitrust

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04.18.2007

Antitrust & IP