Lessons from the Microsoft Antitrust Cases

By Andrew I Gavil and Harry First

For three decades Microsoft has been engaged with the global system for enforcing competition policy. In an excerpt from their new book The Microsoft Antitrust Cases, the authors Andrew I. Gavil and Harry First examine the remedies put in place and the further lessons we can learn from these antitrust cases.

Perhaps the greatest challenge for any remedy is to restore the market to where it was before the conduct occurred or‭, ‬perhaps more controversially‭, ‬to jump-start competition in a market that has been damaged in order to improve incentives for more competition‭. ‬The market can then be left to evolve‭, ‬with competition not fettered by the offending conduct‭. ‬From this perspective‭, ‬we draw three lessons from the‭ ‬Microsoft cases‭. ‬None of these observations counsel for‭ ‬“regulating‭” ‬markets‭; ‬rather‭, ‬the lesson here is that true confidence in markets and their outcomes may suggest the need for restorative and rehabilitative measures after a period of anticompetitive distortion‭.‬

First, competition-enforcement agencies and courts should strive to preserve “competitive moments.” If the wheels of antitrust enforcement moved too slowly in any dimension in the Microsoft cases, it was with respect to preserving rivalry before it was effectively vanquished. Timidity in the use of status–quo-preserving preliminary relief, such as temporary restraining orders and preliminary injunctions, can allow such moments to pass. And they cannot be easily recreated, especially if new competitors have been damaged beyond repair or have exited the market. The “balance of equities” should be struck in favor of protecting such emergent competition, especially when tipping is a genuine threat, the justifications for the dominant firm’s conduct appear suspect, and the burden of preliminary relief on the dominant firm is relatively small.

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