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To: Thure Meyer who wrote (19693)	5/25/1998 12:24:00 AM
From: Chung Lee	Respond to of 24154

>>>It will be interesting: they better get some real smart lawyers on both sides.<< The above is the only part of your message I understand 100%, I need a lawyer just to read your post <G>, keep it coming.

To: Thure Meyer who wrote (19693)	5/25/1998 1:04:00 PM
From: Gerald R. Lampton	Read Replies (1) \| Respond to of 24154

To give your arguments fair treatment, I think I'll need to do a lot more reading of the works of W. Brian Arthur. (But, don't worry, two of his books should arrive in the mail any day. Ain't internet bookselling grand?;)) I do agree with what I think you are saying is the issue: Is Microsoft's behavior socially desirable? If so, it should be protected. If not, it should be prohibited. I would like to add a little gloss: If Microsoft's behavior is sufficiently similar to behavior that is socially desirable, and it is difficult for a court to tell the difference, or if the administrative costs of telling the difference are greater than the benefits to be derived from either prohibiting or protecting the entire class of conduct, then a per se rule of either prohibition or protection is the most efficient way of achieving the law's objectives in this area. A per se rule differs from a rule of reason in that there is no weighing of effects, costs and benefits in particular cases -- you simply either outlaw the entire class of conduct or protect it, even if the rule either prohibits some conduct that is socially desirable, as in the case of a per se rule of prohibition, or protects some conduct that, in an ideal world should be prohibited, as in the case of a per se rule of protection. The purpose of such a rule is to avoid all of the legal and administrative costs associated with a detailed development and evaluation of the facts in each case. This would be a rule of law, subject to the same standards of judicial review as other rules of law (as opposed to the standard applicable to issues of fact), so it would place primary responsibility for its development and enforcement in the hands of those courts responsible in our system of government for the development of rules of law. To frame a possible rule in this case, then, we could perhaps create a rule that states that, in network externalities cases, monopolization or or monopoly maintenance through the use of "predatory" conduct is legal or illegal per se. Monopolization or monopoly maintenance through horizontal merger and creation of cartels would, of course, still be illegal in either case. Which one we would choose would depend on whether we thought the benefits of protecting the entire class of conduct outweighed the cost of letting a few cases of admittedly socially harmful conduct slip through the net, or whether the benefits of prohibiting the entire class of conduct outweigh the costs of suppressing those few instances of the conduct that are beneficial. In antitrust law certain classes of conduct, such as horizontal agreements to fix prices, are already illegal per se, so there is already some precedent for a per se rule of prohibition. I can think of one well known per se rule of protection, but it isn't in antitrust law. It's the First Amendment's per se rule protecting speech. I haven't really thought about it a lot in a careful, disciplined way, but adopting a per se rule of protection that would be applicable in Microsoft's case strikes me as counter-intuitive.