"instead of sending every customer his brand’s largest book, he looks for frequent website visitors and asks, 'Can I only send her 50 pages, or 20, as a reminder of, ‘Oh, I’ve got to go to the website’?”
WSJ, here (and below).
The Journal mischaracterizes the trial court’s ruling in the Justice Department’s antitrust case against Apple and five e-book publishers (“All Along the Apple Watchtower,” Review & Outlook, Feb. 17). Specifically, you say that the court found that “allowing consumers to read e-books on the iPad was an antitrust conspiracy.” Not so. The case was about agreements on a vital dimension of competition, namely price. It has long been a universally accepted proposition in both law and economics that agreements among competitors to set and regulate prices are anticompetitive. Thus, the court correctly found the agreements illegal. It is no justification that the agreements were intended to wrest control over the pricing of e-books from Amazon, the dominant player in e-book retailing.
Legitimate competition erodes a dominant firm’s position by offering consumers better prices or products. Here consumers received a worse deal. Indeed, the court found that the agreem…
Footnote 9: "At a higher level of abstraction, this means that those competitors who cannot access users are
unable to improve their search algorithms, thereby impairing their ability to compete with
Defendant on the merits of their respective search products... This is akin to the
theory of Sherman Act § 2 monopoly maintenance described in Microsoft, 253 F.3d at 60-62,
wherein Microsoft’s exclusive licensing terms prevented OEMs from promoting rival Internet
browsers, thereby reducing rival browser usage and developer interest in those browsers, with the
effect of maintaining developer focus on developing for Microsoft’s Windows operating system,
which contributed to maintaining Microsoft’s monopoly over the market for operating systems" (emphasis added).
1998: "To meet Microsoft’s arguments about the integration of the operating system and the browser, Justice Department lawyers needed to understand how software programs were written...They needed to appreciate the technical characteristics of software code and design, something that Microsoft and its software engineers already understood", in A. Gavil, H. First, The Microsoft Antitrust Cases: Competition Policy for the Twenty-first Century, MIT Press, 2014. A terrific read, see here for a book review - with which I only partially agree, though. Contrary to the reviewer's opinion, I didn't miss the "drama" at all (read the footnotes!). Moreover, there are plenty of references to the economic underpinnings of the Microsoft cases (basically, network economics and the then nascent theory of two-sided markets). However, what I'd have liked to find in the book is also an in-depth discussion of the suitability of the economic theories that played a decisive …