You mean, I presume, right in that "the DOJ's case is a 'monopoly maintenance case' for which structural remedies are inappropriate." The alternative being "conduct remedies", I guess.
I can't speak for Neukom, obviously. But you've got my interpretation of his comments right.
Don't get me wrong. I still think Microsoft, its shareholders, and the industry would be better off if they broke up the company rather than imposing a bunch of conduct remedies.
The case has played out pretty much as I thought it would, except I did not think in the beginning that the government would try to break up the company, and I did not expect Microsoft to screw things up as badly as they did in their defense.
Do you want to say more about what "monopoly maintenance case" means?
It means the DOJ is challenging Microsoft's illegal tactics to maintain, rather than to create, its monopoly. They are not questioning the legality of the monopoly itself.
The nature of the case creates, in my view, a very interesting dilemma for the DOJ. The DOJ has done an excellent job of proving that Microsoft is a natural monopoly based on the "applications barrier to entry," but, as a monopoly maintenance case, their case seeks to proscribe Microsoft's predatory conduct, not the monopoly itself.
Neukom says in the press conference that the remedy has to be proportional to the crime, that, if it's conduct in maintaining the monopoly the DOJ is attacking, it's conduct in maintaining the monopoly the DOJ should try to remedy. Attacking the monopoly itself is not warranted (in his view).
Leaving this aside, as well as the issue of whether Microsoft will try to circumvent conduct remedies, which I think they will, there is absolutely no assurance that conduct remedies will actually erode the market power or cure the harm to consumers that the case was brought to redress. That is because it is not at all clear that Microsoft's predatory conduct was the cause of that market power and harm in the first place. In fact, the DOJ's proof of the height of the applications barrier to entry suggests the contrary. And, the fact that Neukom & Co. are so hot for conduct remedies, while the state AGs, and now, evidently, DOJ, want to break up the company or force disclosure of Windows source suggests that everyone does in fact agree that the real source of Microsoft's market power is the natural Windows monopoly and not the predatory conduct the DOJ has documented so effectively.
On the other hand, a breakup, which would seek to attack the Windows monopoly directly, does not fit this case. First, it goes way beyond the scope of the wrong that the complaint alleges.
Second, a breakup makes sense in a naturally competitive market but would harm consumers in a market that is a natural monopoly.
Thus, in the oil market, for example, John D. might have been able to achieve economies of scale in the refining of oil, but, at some point, rising transportation costs would have allowed other firms to undersell him in markets on his periphery. By selling below cost, he could prevent this from happening. Hence, antitrust outlaws predatory conduct by a firm seeking to monopolize a naturally competitive market, and if illegal conduct is sufficiently pervasive that conduct remedies will not cure the problem, a breakup is the indicated solution.
In a naturally monopolistic market, a single firm is the most efficient way to serve the entire market. If you break up a natural monopoly, costs to consumers will rise and consumers will be hurt (though competitor pretenders to the monopolist's throne will benefit) until a new monopolist emerges.
So, by breaking up Microsoft (or, for that matter, by imposing conduct remedies), all the DOJ is doing is making it easier for a new natural monopolist to emerge. This, in my view, is protecting competitors, not competition.
Is Neukom inviting DoJ to help in maintaining Microsoft's monopoly?
In my view, no, except to the extent a weak settlement would do so. |
