|
Slide 1
Predictability
David A. Heiner
Vice President, Deputy General Counsel (Antitrust)
Microsoft Corporation
January 30, 2007
Presented at DOJ/FTC Hearings on Single Firm Conduct
Slide 2
Business Perspective
- Microsoft: Considerable experience under Section 2
- Product design, packaging, pricing, licensing
- Predictability of utmost concern
- Firms really want to know the rules of the road
- Yet application of law increasingly difficult to predict
- Consequences to business and consumers greaterthan ever
- Rule of Reason
- Hard to apply when experts fundamentally disagreeas to whether
particular effects are procompetitive or anticompetitive
- Windows integration examples
Slide 3
Predictability
Various Factors Combine to Make Predictions Increasingly Uncertain
New
Business
Models
|
- Development of compatible "ecosystems"
- Very low marginal cost products or services
- Complex relationships among firms
|
New
Technologies
|
- IP based
- Increasing antitrust focus on product design
- Tim lag between design, assertion of antitrust claims
|
Slide 4
Predictability
Various Factors Combine to Make Predictions Increasingly Uncertain
Multiple
Constituencies
|
- Rise of multi-sided markets
- Differing business interests (and thus varying potential antitrust
claims)
even of similarly situated firms
- Web search example
|
Multiple
Enforcers
|
- DOJ, FTC, State, competitors, consumers
- With globalization, increasing assertiveness and number of
foreign agencies: EU, Asia
- Broad scope of prosecutorial discretion
- Interation among enforcers
|
Slide 5
Stakes Higher than Ever
Product Design Timeline
| Design |
Development |
Production
Release |
Claim
Assesment |
| Year 1 |
Year 2 |
Year 3 |
Year 4 |
Design decisions
- Often must be made years before product release
- Often difficult or impossible to "undo" later
- Relied upon by third parties, other parts of theproduct
- Windows 95 example
Slide 6
Stakes Higher than Ever
IP Licensing
- Decisions often irreversible: Once propietarytechnology licensed,
typically can't get it back
- Trade secrets revealed
- Firms rely upon licensed IP
- Global antitrust enforcement
- Agency demand for licensing on a worldwide basis
- Agency imposing greatest licensing obligations de facto determines
rules (likely not to be U.S.)
- Risk that value of IP is diminished
- Royalties not established by market forces
Slide 7
Consequences
Risk of overdeterrence arises from combo of
- Difficulty in predicting outcomes, changing course later
- Variety and number of possible claims
- Desire to avoid controversy
Consumer welfare effects
- Limitations on product improvement
- Antitrust advice to (gulp) raise prices
- Lower package prices would be efficient absent any effect on
competitors (demand aggregation)
- Increased R&D costs
- Slowed decision-making; use of senior exec time
- Work with questionable commercial value
Slide 8
Suggestions
Clarity
- Stronger presumption that conduct widely practiced by firms with
and w/o market power is efficient
Convergence
- Redoubled effort by U.S. agencies to evangelize U.S. approach
- Provides greater predictability than other approaches
Comity
- Increasingly important to allocate responsibility among multiple
agencies
- Greater deference to rules of defendant's home jurisdiction
Slide 9
Microsoft®
|