Microsoft, antitrust and innovation

Georg Greve is not convinced by Microsoft's and the US Justice Department's complaints about the EU Court of First Instance siding with the Commission in their antitrust actions against the company.

"If one were to believe Microsoft, antitrust law is for sore losers who are too lazy to innovate, and the decision of the European Court of Justice against Microsoft was to the detriment of consumers around the world...

This allegation does not hold up to examination though. Allow me to tell you why.

1st Fallacy: That the Ruling Punishes Innovation

The first fallacy was that this kind of ruling punished the innovator. Who were the innovators? Real Inc. innovated the streaming media market, and Novell was the innovator in the workgroup server market. In both cases Microsoft unfairly leveraged its desktop monopoly to drive the innovator out of the market. That is why future innovators in Silicon Valley often do not receive venture capital if they do not have defensive strategies against Microsoft or at least a co-existence strategy. Quite often that strategy is to become successful enough to become an attractive purchase for Microsoft. Not much of a reward for innovation."

One of the functions of antitrust law is to create an environment that is protective of the innovator. Microsoft has not been an innovator.

2nd Fallacy: That Google, Apple and All Successful Companies Need to Fear

The second claim, echoed widely by major media outfits, is that Google and Apple should now be worried about similar lawsuits because of their large market shares. But antitrust law is not about having large market shares. Antitrust law says nothing about offering a product and gaining monopolies. As long as there is no distortion of competition in neighboring markets, this is legitimate.

What antitrust law cares about in this context is leveraging monopolies of one market into another through abusive practices. The Commission found Microsoft employing two abusive practices: bundling and the deliberate obstruction of interoperability.