The Microsoft Case

Abstract

The Microsoft case (U.S. vs Microsoft, 1998) is paradigmatic of some of the most important features of an antitrust case, like the definition of the relevant market, the detection of the market power and of its abuse. In the software industry, as the companies are competing on the standard of interconnection, which can be provided at different layers of the chain of production, the competitive environment cannot be restricted to the typical antitrust relevant market. The difficulty in defining the antitrust market in a rational way is not the only obstacle to detecting the Microsoft market power with the traditional methods. That is why a new definition of market power has been provided. With this new framework we have been able to give a precise content to the statement that Microsoft has a market power, which is the pivotal point of the case. We have also shown that changes in the market structure, like the acquisition of Netscape by America on Line, could have substantially lessened this market power to the point where no more antitrust action is desirable.