FC: Why Judge Jackson, Larry Lessig were wrong on software integration

From: Declan McCullagh (declanat_private)
Date: Wed Nov 20 2002 - 12:14:18 PST

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    An Antitrust Rule for Software Integration
    American Enterprise Institute (AEI) - General
    Yale Journal on Regulation, Vol. 18, No. 1, 2001
    What is the proper legal standard for product integration involving 
    software? Because software is subject to low marginal costs, network 
    effects, and rapid technological innovation, the Supreme Court's existing 
    antitrust rules on tying arrangements, which evolved from industries not 
    possessing such characteristics, are inappropriate. In this Article, I ask 
    why firms integrate software products. Next, I review the Supreme Court's 
    tying decisions in Jefferson Parish and Eastman Kodak. I propose an 
    approach to judging the lawfulness of product integration in 
    technologically dynamic markets that supplements the Supreme Court's 
    current standard with four additional steps in cases of tying of computer 
    software. Thereafter, I examine the D.C. Circuit's approach to software 
    integration, which arose from that court's 1998 interpretation, in 
    Microsoft II, of an antitrust consent decree between the U.S. Department of 
    Justice and Microsoft Corporation. I argue that the D.C. Circuit's rule has 
    general applicability and should be recognized as the appropriate standard 
    for software integration under antitrust law. I show how my approach 
    imparts greater clarity to the D.C. Circuit's rule. I examine the competing 
    product integration rule proposed in 2000 by Professor Lawrence Lessig as 
    amicus curiae in the government's subsequent antitrust case against 
    Microsoft, concerning the integration of Internet Explorer and Windows 98. 
    My approach enables Professor Lessig's analysis to be reconciled with the 
    D.C. Circuit's rule, but Professor Lessig's rule, on its own, would contain 
    serious shortcomings. Thereafter, I evaluate Judge Thomas Penfield 
    Jackson's April 2000 findings of law on the integration of Internet 
    Explorer and Windows 98. I conclude that Judge Jackson's approach, in 
    contrast to the D.C. Circuit's rule as refined by my approach, would harm 
    consumers in the technologically dynamic market for computer software.
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