Remedies in High-Tech Industries

Slide 1

Remedies in High-Tech Industries

David A.Heiner
Vice President, Deputy General Counsel (Antitrust)
Microsoft Corporation

March 28, 2007

Presented at DOJ/FTC Hearings on Single Firm Conduct

Microsoft Remedies

Overall Approach

Focus on creating or preserving competitive opportunities, rather than limiting defendant痴 efforts to deliver consumer value

U.S. Consent Decree

• Focused on creating competitive opportunities
• No ban on including new functionality (but governed by Rule of Reason)
• Consumers benefit from ability to choose integrated approach or separate programs—or both
• Today: Broad distribution of competing software on new Windows PC

EU Decision

• Focused on removing useful functionality from Windows (Windows XP N)
• No uptake by any computer manufacturer
• Costs imposed, but little apparent benefit to anyone

Objective

Aim to create competitive opportunities, rather than engineer particular market outcomes

[D]

Assess Remedy and Liability Together

Careful consideration of remedy at outset may inform liability analysis, speed resolution

Windows Inegration Legal Analysis

• May create challenges for competitors, yet...
• Benefits for software developers, consumers; and
• Long history of product improvement through integration across many product categories

Settlement

• Seemingly impossible to fashion appropriate remedy to limit integration over time
• Renders cases difficult of impossible to settle

Liability

• Unlawful in Europe & Korea to fail to offer product (Windows XP N) for which there is no appreciable consumer demand?

Type of Remedy

Legal process generally best suited to contractual relief

Contracts

• Purview of lawyers
• Relatively easy to monitor (for defendants and enforcers)

Product Design

• May require considerable technical expertise to device & monitor remedy
• Difficult for lawyers to assess issues that may arise, even with expert help
• Agency lawyers likely to get drawn into detailed design decisions

Technology Sharing

• Technological complexity may lead to enforcement complexity
• Pricing may be particularly challenging for information goods

Cross-Border Considerations

High-tech markets often global in nature

Agency Cooperation

• Greater coordination on remedies with global reach
• Due respect for comity principles

Windows

• Central value proposition: enabling compatibility through uniformity
• Value threatened by varying approaches to integration issue

Compulsory Licensing

• Most onerous legal regime becomes de facto legal rule worldwide