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Technology Stocks : How high will Microsoft fly?
MSFT 486.96-1.0%3:59 PM EST
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To: nnillionaire who wrote (4248)12/12/1997 4:25:00 PM
From: Sowbug   of 74651
 
I am a lawyer. The following might help everyone understand exactly what's going on here (John got it essentially right):

In intellectual property law there's something called "tying," and it's almost always illegal. For example, I have a patent on a machine that washes dishes. The machine needs (1) water softener, (2) dishwashing detergent, and (3) machine oil.

Suppose I sold the dishwasher, but ONLY if you bought a two years' supply of water softener, dishwashing detergent, and machine oil. Furthermore, the expected lifetime of the washer is two years.

This is tying. I have a patent on the machine, but I'm trying to extend the power of the patent over three completely non-patented things, thereby eliminating all supplier competition.

What I have to do to avoid getting hit with an antitrust penalty is sell all the following packages:

1. The machine separately;
2. The machine with supplies;
3. The supplies alone.

I can give wonderful discounts for the supplies if you buy it all together, but you have to give your competitors a chance to sell your machine's supplies.

The MSFT situation isn't exactly like tying, but the judge's ruling is essentially similar to what a tying antitrust remedy would be.
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