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Slide 2Major Topics
Slide 3Principles and Objectives
Slide 4Remedies in the Microsoft Case
Slide 5A. The underlying economics and the “applications barrier to entry”
Slide 6A. The underlying economics and the “applications barrier to entry”
As a result, an operating system that becomes relatively popular attracts more applications. These attract additional users which, in turn, attracts even more users, and so on.
Eventually, that operating system attains monopoly power as other operating systems find it difficult or expensive to attract application writers – the “applications barrier to entry”.
Slide 7B. The Violation
Microsoft was not content with this natural phenomenon, however. It sought to destroy or contain two innovations (Netscape’s browser and Sun Microsystem’s Java) that threatened to weaken or remove the applications barrier to entry.
Slide 8C. Conduct Remedies
Remedy 1. The ultimate settlement
Matched violation and may deter similar conduct. Did not restore competition and may have left Microsoft secure in having destroyed two important threats.
Slide 9C. Conduct Remedies
Remedy 2. Letting other operating systems use Windows’ APIs.
Might have gone too far. Would have required prolonged and complicated judicial oversight.
Slide 10D. Structural Remedies Remedy 3. The “Baby Bills”
Three successor companies each with Windows
Slide 11D. Structural Remedies
Remedy 4 (proposed by Antitrust Division)
Slide 12D. Structural Remedies
Remedy 5. (Proposed by Herbert Hovenkamp but apparently not seriously discussed.)
Have Microsoft auction off n licenses to Windows and requisite knowhow. Do nothing further.
A model of remedy design despite its possible flaws.