Vista and antitrust confusion

Vista and antitrust confusion

Summary: The EU claims that the burden of determing what should or shouldn't be included in Vista in order to comply with EU antitrust rules falls on Microsoft. Unfortunately, this claim reveals a fundamental lack of understanding about the nature of antitrust law.

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TOPICS: EU
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Microsoft has suggested that they might have to delay the rollout of Vista in Europe unless they learn soon whether the EU will require design changes in order to pass antitrust muster. In response, an EU representative had this to say:

It is not up to the Commission to give Microsoft a green light before Vista is put on the market; it is up to Microsoft to accept and implement its responsibilities as a near-monopolist to ensure full compliance with EU competition rules.

That response misses something pretty fundamental about the system of laws known as "antitrust." Antitrust is NOT like laws against murder, or theft, or other "crimes" laws have been written to prevent. It's pretty easy to determine whether or not someone has been killed, or something stolen.

Antitrust isn't like that. Antitrust laws don't provide ANY guidance as to a standard by which to judge whether or not a company is a "monopoly," nor any rules - much less limits - governing what should be done once a company is declared a monopoly. On the determination of monopoly side, it all comes down to market definition, the exact shape of which is up to the prosecution (though they have to prove the validity of that definition in court). In America, market's have been defined in such a way as to block the merger of shoe companies out of concern that the merged entity would have partial monopolies in some small towns. On the remedy side, penalties can range from a simple fine through a complex micro-managed breakup in the style of AT&T or Standard Oil.

Complicating the situation is that in the cut-throat world of global markets, you are dealing with companies that kill each other on a regular basis. They create exclusive deals with partners, they actively attempt to undercut the price of rivals, they say bad things about competitors in the press (part of the interflow of information, and something the other side does in return), and do things that generally wouldn't get you invited to little Timmy's birthday party...and these are considered some of the good aspects of competition.

This is why antitrust REQUIRES someone to make a determination. Such a determination does not fall in and of itself from the text of current antitrust law.

I'm repeating myself, but it's a point worth repeating: Antitrust REQUIRES that someone make a call as to who is or isn't a monopoly, and what is or isn't permissible activity of that monopolist (whether the definitions and constraints should be so loose is a different question, but people who've read my opinion on this matter can guess my thoughts on that). In America, that determination is largely worked out in the courts and a judge (in this case, Kollar-Kotelly) is responsible for oversight. In the European Union, it is worked out internally by the Commission then passed through a legal appeals process at the Court of First Instance. Either way, however, SOMEONE is determining what is considered permissible.

This is the situation apart from any antitrust ruling. The nature of a ruling can add its own complications.

In America, Microsoft was given the right to include, for the most part, whatever it wants in Windows (leaving questions of design with software engineers, in other words), provided they ensured that core interoperability protocols used were fully documented and alternatives could quickly and easily be chosen that override the defaults. Though there is of necessity some imprecision in the ruling (oversight is still required), it is reasonably well defined such that Microsoft mostly knows what it needs to do. In Europe, however, the EU Commission ruled that, along with documentation requirements for key interoperability protocols, they had to offer a version of Windows WITHOUT Media Player.

Ignore for the moment that no one bought the Media Player-free version of Windows. Why Media Player? Why not Internet Explorer? Why not MSN Messenger? Why not Microsoft's TCP/IP networking stack, the inclusion of which put companies such as Trumpet Winsock out of business with the arrival of Windows 95? What about standard HTTP libraries, something someone else could do separately? How low in the software stack should we go?

No, saying "it's obvious" isn't good enough.

What was it about Media Player that made it different than any other inclusion, and how can Microsoft, on its own, generalize from it so that they know what they can or cannot include in Vista?

Basically, the EU Commission created a ruling that is EXTREMELY hard to use as a foundation for self-regulation by the accused. This yields a situation where the EU Commission is OBLIGATED to be the gatekeeper post-ruling in ways the US government does not have to be.

If the EU doesn't want to be the gatekeeper, then it needs to create a ruling that does not force it to act as such, something that, at a minimum, should include declaring that Microsoft has the right to design its own software (documentation requirements, on the other hand, are reasonable). Until that happens, the Commission needs to understand that it IS in the driver's seat with respect to whether or not Vista gets rolled out in Europe at the same time as the rest of the world.

My opinion, of course, not Microsoft's...

Topic: EU

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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106 comments
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  • ex post facto crime

    A monopoly doesn't exist until a market is defined. Judge Jackson defined the market, determined Microsoft was a monopolist, and convicted the company of abusing the monopoly it did not legally know it had.

    That has bothered me. I think a solution is to have an administrative procedure which declares a monopoly and reviews its decisions.

    The current mechanism in the US is convicting companies of violating laws that were not applicable until conviction.
    Anton Philidor
    • I would say...

      ...that if we are going to keep antitrust as policy (and we are, as we will have as much luck of doing away with it as we would of doing away with patents on software), we need to a) create more rigorous definitions of what, exactly, constitutes monopoly, and b) create boundaries around what government can and cannot demand in the way of remedy. What should ALWAYS be off the table is breakup of a company, as government simple is not competent to manage that process. What SHOULD be on the table, at least in software, are protocol documentation, or anything else designed to mitigate market power (versus redesign the market, which is what a breakup entails).
      John Carroll
      • Courts and company breakups.

        Judges do recognize that breaking up a company is a very significant action. Particularly when a company has expanded primarily by increasing sales rather than by buying other companies.

        I think the AT&T breakup was a settlement. Which the company decided to accept, I've read, because capital for installing technology upgrades would be so difficult to obtain(!).

        However well managed, the way the Bell system is reassembling itself shows that the idea of a breakup is often flawed.

        So, knowing I could be wrong, company breakups can remain on the table. And gather dust.


        As far as market power is concerned, consider that the network effect shows that market power, a single standard (de facto or by agreement as opposed to the anti-Microsoft type), is good.

        So market power, too, should be regulated only at the extremes. Market power should not be mitigated or restricted, but it should be controlled so that it is not used damagingly.

        And if keeping information secret damages the ability of others to compete in a separate market, that's unfair advantage. The solution is ending the problem and sharing the necessary information.

        The problem is keeping the information secret, and not the fact that the information is valuable.


        The problem with the EC decision for me is whether the information Micrsoft kept secret is unfairly depriving competitors or only showing the good results of Microsft's research by effective software.

        If competitors don't need the information to compete, Microsoft's innovations shouldn't be given to competitors just to make those competitors' products better.
        Anton Philidor
        • Market power is defined

          The FTC and DOJ use a formula to both define and regulate Monopolies. John is talking out his rear here (As he claims to have studied Economics I would even say he is purposely doing this), let alone Microsoft was warned many times and signed several consent decrees before action was brought against them in the US- In otherwords they knew they were considered a monopoly.

          The Herfindahl-Hirschman Index (HHI) is used in the US to figure Market power however although they did switch to new rules under Reagan- the HHI is still used.

          Anyhow if your software product is installed on 90%+ of major OEM shipments you can bet you are a Monopoly. That one is a No-Brainer.

          finally Anti-Trust law in the US encompasses several different acts. the Sherman Act and the Clayton Act are the two main ones. The Clayton Act bars certain practices, such as sole-source or exclusive dealing contracts, providing discounts on your product if you exclude a competitors product, giving a greater discount in one part of the country than another in order to kill competition, ect despite your size.

          this is the Clayton Act:

          http://www.stolaf.edu/people/becker/antitrust/statutes/clayton.html

          This is the Sherman Act:

          http://www.stolaf.edu/people/becker/antitrust/statutes/sherman.html

          Anti-trust, as does copyright law, carries civil and criminal penalties. It is actually both.

          Microsoft was found to have violated both Acts and this was upheld on 8 counts by the COA and the Supreme Court refused to hear their appeal (As there were no Constitutional issues involved). And no they did not Settle this (8 States refused to settle) as there was a final judgment and this why there is judicial oversight now.
          Edward Meyers
          • General to particular.

            How a law works can be considered without regard to specific cases. A procedure that declares rules applicable and then convicts past behaviors is troublesome, even if one feels the action appropriate in a given case.

            As I observed in a subsequent post:

            "You know and I know and Microsoft knew what the company's market share was for some of its software.

            But the identification of a monopoly is not always so clear cut. And, as you say, there should be some rules for defining a market.

            My recommendation is that there be an administrative process which does not determine guilt or assess penalties, but which does define markets and identify monopolists.

            So that there is some certainty that the accused knows that the law he is accused of violating was applicable to him."


            And though Mr. Carroll can speak for himself, his response to me below and his comments above both show me at least that he was considering the situation in general instead of only the Microsoft case in particular.
            Anton Philidor
          • The Clayton Act

            Prohibits activities regardless if you are a Monopoly or not. Microsoft also got hit with Clayton Act violations.

            The HHI is used by the DOJ and FTC to determain Monopoly power in a market in antitrust law.

            This is a moot point as you can bet you have monopoly power if you have 90% of the market in anything.

            So the Clayton Act violations were pretty clear cut- They paid OEMs not to install competitors software. This is against the law regardless of market size. It is pretty clear cut BTW- It's against the law to pay someone/offer a discount to someone if the condition is not to use/sell the competitors product. How much more clear cut do you want it?
            Edward Meyers
          • Read it again.

            "Prohibits activities regardless if you are a Monopoly or not. Microsoft also got hit with Clayton Act violations."

            Not quite.

            "Sec. 14. Sale, etc., on agreement not to use goods of competitor (? 3 of the Clayton Act)

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, <b>where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce."</b>

            You didn't read the whole paragraph. Exclusionary contracts are in violation of the Clayton act if the contract is used to form a monopoly by decreasing the competition substantially. So an exclusive contract that doesn't form a monopoly or reduce competition is legal. Now a court of law has to determine damages. Not so clear cut.

            There are exceptions to the anti-trust laws too. There are no other vendors that can do the job.
            osreinstall
          • Read it again - hopefully with better formatting.

            <i>Prohibits activities regardless if you are a Monopoly or not. Microsoft also got hit with Clayton Act violations.</i>

            Not quite.

            --Sec. 14. Sale, etc., on agreement not to use goods of competitor (? 3 of the Clayton Act)

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, <b>where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.</b>--

            You didn't read the whole paragraph. Exclusionary contracts are in violation of the Clayton act if the contract is used to form a monopoly by decreasing the competition substantially. So an exclusive contract that doesn't form a monopoly or reduce competition is legal. Now a court of law has to determine damages. Not so clear cut.

            There are exceptions to the anti-trust laws too. There are no other vendors that can do the job.
            osreinstall
          • Paragraph doesn't end there

            The paragraph continues with an OR.

            [i]destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered: Provided, however, That the Federal Trade Commission may, after due investigation and hearing to all interested parties, fix and establish quantity limits, and revise the same as it finds necessary, as to particular commodities or classes of commodities, where it finds that available purchasers in greater quantities are so few as to render differentials on account thereof unjustly discriminatory or promotive of monopoly in any line of commerce; and the foregoing shall then not be construed to permit differentials based on differences in quantities greater than those so fixed and established: And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: And provided further, That nothing herein contained shall prevent price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned.[/i]

            And that is not the only prohibitted behavior under the Clayton Act.

            It is actually against the law for you to receive benefits from such a contract:

            [i][b](f) Knowingly inducing or receiving discriminatory price[/b]

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.[/i]
            Edward Meyers
          • You missed it.

            Here is what I said but the formatting went away.

            Sec. 14. Sale, etc., on agreement not to use goods of competitor

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, <b>where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.</b>

            You just posted Sect 13. I was posting Sect 14. Sect 13 is price discrimination between customers. Sect 14 is exclusivity in contracts which I was arguing on.

            I wanted to show you that exclusive contracts are not always illegal that you claimed. It has to hurt the competition to be illegal. It also has to form a monopoly in that market. Also these changes to the market have to be significant. A court of law will decide if the changes are drastic enough to invoke the Clayton Act. Saying "well it's obvious they are a monopoly" isn't good enough. It has to go thru due process.
            osreinstall
          • Re: market power is defined

            [i]The FTC and DOJ use a formula to both define and regulate Monopolies. John is talking out his rear here[/i]

            A formula that is rigorous, doesn't change from administration to administration, and is written down so that outside parties can use it as a way to guide their own activities? Not hardly. They might have an "internal formula," but tell it certainly isn't a formula set in stone, and relies heavily on the interpretation of the person applying the "formula."

            [i](As he claims to have studied Economics I would even say he is purposely doing this),[/i]

            Yes, Ed, I'm lying, because hey, it's fun.

            [i]let alone Microsoft was warned many times and signed several consent decrees before action was brought against them in the US- In otherwords they knew they were considered a monopoly.[/i]

            They knew that government was thinking about putting together a case that claims they were a monopoly based on a particular definition of relevant market. Until that theory gets proven in court, though, it's just that, a theory, and one that ONLY government gets to create.

            [i]The Herfindahl-Hirschman Index (HHI) is used in the US to figure Market power however although they did switch to new rules under Reagan- the HHI is still used.[/i]

            How in the heck is Microsoft supposed to sit down and apply the Herfindahl-Hirschman Index to decide whether or not they are a monopoly? You make it sound like using the index is like a bunch of guys in white coats pouring liquids into beakers. Besides, it's not an index that automatically triggers monopoly status. The results have to be proven and court, and besides, the results vary widely based on the interpretation of the measure, the data plugged in, and what the user arbitrarily decides to plug in as a relevant market.

            [i]Anyhow if your software product is installed on 90%+ of major OEM shipments you can bet you are a Monopoly. That one is a No-Brainer.[/i]

            If you define the market as JUST deskop PCs, which in our spreading computing universe is NOT the only game in town. Would you exclude the fact that AT&T must now operate in a global market for telecommunications when considering whether to be overly concerned about monopolization in the American market? Would you ignore the capabilities of cable, or or powerline broadband? Market definitions are NOT bald-faced obvious.

            [i]finally Anti-Trust law in the US encompasses several different acts. the Sherman Act and the Clayton Act are the two main ones. The Clayton Act bars certain practices, such as sole-source or exclusive dealing contracts, providing discounts on your product if you exclude a competitors product, giving a greater discount in one part of the country than another in order to kill competition, ect despite your size.[/i]

            How does any of that determine what products Microsoft is allowed to include into Windows? You've found a couple of guidelines, but is that substitute for a precisely tailored ruling that defines EXACTLY what Microsoft should do? Does it add any clarity to what kind of documentation Microsoft is supposed to supply? Those Clayton remedy rules are like abstract paintings, and they don't even cover the full palate of possible colors and shades that can be used in a potential remedy.

            Like I said, antitrust requires a) a government to decide who is or isn't a monopoly, and b) a government to outline the remedy.
            John Carroll
          • No,It serves your purpose

            [i]
            Yes, Ed, I'm lying, because hey, it's fun.
            [/i]

            No, It serves your purpose in defending your employer in the court of Public Opinion.

            [i]let alone Microsoft was warned many times and signed several consent decrees before action was brought against them in the US- In otherwords they knew they were considered a monopoly.

            They knew that government was thinking about putting together a case that claims they were a monopoly based on a particular definition of relevant market. Until that theory gets proven in court, though, it's just that, a theory, and one that ONLY government gets to create.[/i]

            The DOJ started investigating in 1991. they knew they were going to bring action against them. They signed multiple consent decrees only to break them and then kept on tying stuff to the OS and continued in its OEM pricing strategy. Sounds pretty much like they were asking the DOJ to sue them. I mean how many chance do they need. They already signed two consent decrees which were worth less than the paper they were on as they didn't intend to ever change their behavior until ordered by a judge to do so.

            [i]Anti-Trust law in the US encompasses several different acts. the Sherman Act and the Clayton Act are the two main ones. The Clayton Act bars certain practices, such as sole-source or exclusive dealing contracts, providing discounts on your product if you exclude a competitors product, giving a greater discount in one part of the country than another in order to kill competition, ect despite your size.

            How does any of that determine what products Microsoft is allowed to include into Windows? You've found a couple of guidelines, but is that substitute for a precisely tailored ruling that defines EXACTLY what Microsoft should do? Does it add any clarity to what kind of documentation Microsoft is supposed to supply? Those Clayton remedy rules are like abstract paintings, and they don't even cover the full palate of possible colors and shades that can be used in a potential remedy.

            [/i]

            The Clayton Act doesn't care what your market share is. You can have no marketshare to speak of and violate the Clayton act. the prohibited behaviors are pretty clear cut.

            Under the Sherman Act if you have 90%+ of a market it is pretty simple- don't tie anything to your product. Microsoft could easily place the software they want to distribute with Windows on a CD and then allow users to pick and choose what software they wish or don't wish to install. Or offer it as a download. They don't as they want to tie their other products to Windows.

            Also you claim that Macs should have been considered- Okay let us consider the 3% marketshare of Apple. Does it change they still had 90%+ of the market?

            Nope.

            Not a Winner. Thanks for playing.

            Well I suppose if we include Apple II's/Commodore 64's still in use back then, dedicated word processors/typewriters (Those were big hits back then), programmable VCRs,or how about Texas instrument programmable calculators perhaps they wouldn't have a monopoly then- But that is absurd.

            [i]Like I said, antitrust requires a) a government to decide who is or isn't a monopoly, and b) a government to outline the remedy.[/i]

            In the US the government only comes up with a remedy when you abuse your monopoly position. If you don't want to end up in court don't tie products. That sounds pretty reasonable doesn't it?
            Edward Meyers
          • Re: No

            [i]No, It serves your purpose in defending your employer in the court of Public Opinion[/i]

            And your position serves your purpose as an employee of RedHat. Since you work there, I can ignore whether any of your arguments have logical resonance?

            What, you don't work at RedHat? How the **** am I supposed to know that? I'll tell you the same thing I just told Richard Flude (and is the reason I've told him we aren't debating anymore)...stick with the logic of my arguments, not your theories about ulterior motives. You are capable of doing that, and do it well.

            [i]The DOJ started investigating in 1991. they knew they were going to bring action against them. They signed multiple consent decrees only to break them and then kept on tying stuff to the OS and continued in its OEM pricing strategy.[/i]

            So, should companies always respond to what MIGHT happen, irrespective of whether the theory will ever hold water in court? Seems like a blank check for government bullying, and a way for them to move FAR beyond what the point of antitrust is supposed to be about. All they have to do is threaten, and companies cower in their caves. That's what totalitarian regimes are made of?

            [i]They already signed two consent decrees which were worth less than the paper they were on as they didn't intend to ever change their behavior until ordered by a judge to do so.[/i]

            Yes, they did, and decided that it was worthwhile to defend the principle that software companies have the right to add whatever enhancements they want to their own products. Software companies should have the right to control their own design. Consequently, Microsoft WON that argument, at least in America. Granted, they have to make sure other products are replaceable and choosable by consumers, but the principle that Microsoft is allowed to add IE, or Media Player, or IM tools is now established law.

            THAT'S why companies should insist on fighting for what is right, at least where the principle is sufficiently important. Controlling your own design IS important.

            [i]The Clayton Act doesn't care what your market share is. You can have no marketshare to speak of and violate the Clayton act. the prohibited behaviors are pretty clear cut. [/i]

            Not true, as should be obvious considering that preferential contracts are quite common in the industry. But, from the text (section 13.a)...

            [b], and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them:[/b]

            The Clayton act is about governing MONOPOLISTS...not proscribing certain types of business conduct in general.

            [i]Under the Sherman Act if you have 90%+ of a market it is pretty simple- don't tie anything to your product. Microsoft could easily place the software they want to distribute with Windows on a CD and then allow users to pick and choose what software they wish or don't wish to install. Or offer it as a download. They don't as they want to tie their other products to Windows.[/i]

            ...and in so doing, not be able to use HTML inside the operating system, assume the presence of a networking stack, or enable third parties to assume the presence of these features. You are advocating a business model practiced by other operating systems (namely, Linux), and as Kollar-Kotelly said, antitrust is not intended [i]to convert certain legitimate aspects of Microsoft?s business model and/or product design into a model which resembles that of other industry participants simple for the sake of changing the status quo[/i] (something [url=http://news.zdnet.com/2100-9595_22-966154.html]I discussed at length 4 years ago[/url]).

            [i]Also you claim that Macs should have been considered- Okay let us consider the 3% marketshare of Apple. Does it change they still had 90%+ of the market? [/i]

            I would argue that a LOT more than macs should be considered, including servers (we live in a web world, and Google is considered a serious competitor to Microsoft's hegemony on the desktop for a reason), and even the growing use of embedded devices (iPod is certainly a nice beachhead from which Apple can grow its market share and colonize Windows).

            [i]In the US the government only comes up with a remedy when you abuse your monopoly position. If you don't want to end up in court don't tie products. That sounds pretty reasonable doesn't it?[/i]

            What you call "tying" others call a legitimate expansion of the standard codebase that constitutes the large application development framework that is Windows. Microsoft won that definition, even if they have to make it possible for third party products to be chosen as default handlers.
            John Carroll
          • Slick Language

            [i]What you call "tying" others call a legitimate expansion of the standard codebase that constitutes the large application development framework that is Windows. Microsoft won that definition, even if they have to make it possible for third party products to be chosen as default handlers.[/i]

            Microsft did not win. This complaints were not dismissed with prejudice but rather sent back to the lower courts. The DOJ just didn't pursue them again.

            In fact Adobe is suing them now for this.

            Microsoft uses it's Monopoly position as Marketing points. They know they have this position and use it to sell more of their software.

            If we are going to include every single device that has some form of computing power to define the "Market" then why not include abacuses.

            Sure if we define the Market broad enough no company would ever fall under the Anti-Trust rules but then again the law wouldn't do what it is suppose to do.

            Finally you missed a good portion of the Clayton Act. It does indeed regulate activities not involving monopolies.

            For example;

            [i][b](f) Knowingly inducing or receiving discriminatory price[/b]

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.[/i]

            There are other prohibited behaviors beyond that also. Indeed it does regulate behavior of non-monopoly companies.
            Edward Meyers
          • Re: Slick Language

            [i]Microsft did not win. This complaints were not dismissed with prejudice but rather sent back to the lower courts. The DOJ just didn't pursue them again.[/i]

            Well, Jackson's proposed remedy WAS overturned, even if the finding of monopoly wasn't. That remedy is now in the public record, and likely to guide future antitrust cases in the technology sector.

            Has Adobe actually filed suit, or is that something people [url=http://www.betanews.com/article/Adobe_to_Sue_Microsoft_for_PDF_Feature/1149263800]think they might do[/url]. I wrote about that in a blog post awhile back, and I don't know that they have actually filed suit. I think they would have a hard time getting a verdict / remedy different than the one that Kollar-Kotelly passed down, simply because precedent carries a lot of weight.

            [i]If we are going to include every single device that has some form of computing power to define the "Market" then why not include abacuses. [/i]

            I say we should include anything that could credibly be used as a client interface. Web applications clearly qualify - which is why servers are included - and the iPod / iTunes combo shows how others can beat Microsoft in spite of preinclusions in Windows (Media Player is NOT the most popular media player on Windows).

            [i](f) Knowingly inducing or receiving discriminatory price

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.

            There are other prohibited behaviors beyond that also. Indeed it does regulate behavior of non-monopoly companies.[/i]

            That's simply false, a fact which should be obvious when considering that discriminatory pricing IS common in the industry, as are exclusive deals, etc. Where they start to be proscribed activity under the Clayton act is when they are done by companies determined to be monopolies, which is why that line I quoted is so important:

            [b], and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them:[/b]

            The Clayton act ONLY bans such activity if it is done by ajudged monopolies, or would result in the creation of one, something that has to be tested in court, to be sure.
            John Carroll
          • Absolutly not true

            Did you even read what I posted?

            [i]The Clayton act ONLY bans such activity if it is done by ajudged monopolies, or would result in the creation of one, something that has to be tested in court, to be sure.[/i]

            Again for you John;

            [i][b](f) Knowingly inducing or receiving discriminatory price[/b]

            It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.[/i]

            If OEM X, regardless of Market Share, asks Microsoft to give them a discount if they only install and sell computers with Windows on it without any regard to volume then OEM X is guilty of inducing discrimination in price.

            Indeed the Clayton Act does regulate more than the monopolies.

            And if you are going to define the Desktop OS market as including web services, well... That is just plain absurd, even more absurd than my suggestion.
            Edward Meyers
          • Re: Absolutely

            [i]If OEM X, regardless of Market Share, asks Microsoft to give them a discount if they only install and sell computers with Windows on it without any regard to volume then OEM X is guilty of inducing discrimination in price. [/i]

            ...because Microsoft is an ajudged monopolist. If OEM X does business with software provider Y who offers a discounted price IF they refuse to preinstall any other media player, and provider Y is not an ajudged monopolist, then that is perfectly legal. That's what I mean when I say the Clayton act ONLY applies when of the parties is considered a monopoly.

            It DOES NOT proscribe exclusive contracts or preferential pricing if none of the parties are considered a monopoly.

            [i]And if you are going to define the Desktop OS market as including web services, well... That is just plain absurd, even more absurd than my suggestion.[/i]

            That's not an argument. If web applications aren't a competitive threat, then why is Google considered a threat to Microsoft? Given that web applications completely bypass the need to write applications targeted at Windows, why is that not considered a technology that mitigates Microsoft's market power to such an extent that they are not a monopoly on what is relevant - namely, APIs for client systems? That's really what the case was about.
            John Carroll
          • "... foreclose competition ..."

            Quoting from a Supreme Cour decision summarized in the Microsoft Appeals Court decision, an agreement which violates the Clayton Act must "... foreclose competition in a substantial share of the line of commerce affected ...".

            See post "Not quite" below for the complete discussion.

            Difficult to violate the Act, then, unless a company has a substantial share of the maket. That means the discussion about monopolies appears to concern a distinction without a difference.
            Anton Philidor
          • Not quite.

            Your discussion of the Clayton Act is not compltely accurate.

            For example, the Clayton Act does not forbid all exclusive contracts. They are considered a normal part of business.

            Quoting the Appeals Court decision in the Microsoft case:

            The Supreme Court most recently considered an antitrust challenge to an exclusive contract in Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 (1961). That case, which involved a challenge to a requirements contract, was brought under ? 3 of the Clayton Act and ?? 1 and 2 of the Sherman Act.

            The Court held that an exclusive contract does not violate the Clayton Act unless its probable effect is to ??foreclose competition in a substantial share of the line of commerce affected.?? Id. at 327.

            The share of the market foreclosed is important because, for the contract to have an adverse effect upon competition, ??the opportunities for other traders to enter into or remain in that market must be significantly limited.?? Id. at 328.

            Although ??[n]either the Court of Appeals nor the District Court [had] considered in detail the question of the relevant market,?? id. at 330, the Court in Tampa Electric examined the record and, after defining the relevant market, determined that the contract affected less than one percent of that market. Id. at 333.

            After concluding, under the Clayton Act, that this share was ??conservatively speaking, quite insubstantial,?? id., the Court went on summarily to reject the Sherman Act claims. Id. at 335 (??[I]f [the contract] does not fall within the broader prescription of ? 3 of the Clayton Act it follows that it is not forbidden by those of the [Sherman Act].??).
            [Re-paragraphed]


            I quote this at length because it shows the Supreme Court defining a market that had not existed at any prior Court, and then determining for itself the degree to which that market was affected.

            Much as I respect the Supreme Court, that sort of decision-making, which can result in a finding of a violation of law years after the action being considered, bothered me again.

            Sorry, but I think these legal specifics are off-topic as I hope to see the topic defined. I went into this because this subject was interesting.
            Anton Philidor
    • Refusal to head warnings

      Actually, MS had been warned multiple times that their behavior was probably illegal. Look at the original consent decree concerning the per-CPU licensing and the run up of "talks" between MS and DoJ before the latest trial and we see that MS wasn't suddenly blind-sided over any of their behavior.

      Contrast this to how Intel deals with DoJ and the FTC and we see why one company got in trouble while the other didn't.
      Robert Crocker