An Antitrust Rule for Software Integration

Abstract

What is the proper legal standard for product integration involving software? Because software is subject to low marginal costs, network effects, and rapid technological innovation, the Supreme Court\u27s existing antitrust rules on tying arrangements, which evolved from industries not possessing such characteristics, are inappropriate. In this Article, I ask why firms integrate software products. Next, I review the Supreme Court\u27s tying decisions in Jefferson Parish and Eastman Kodak. I propose an approach to judging the lawfulness of product integration in technologically dynamic markets that supplements the Supreme Court\u27s current standard with four additional steps in cases of tying of computer software. Thereafter, I examine the D.C. Circuit\u27s approach to software integration, which arose from that court\u27s 1998 interpretation, in Microsoft II, of an antitrust consent decree between the US. Department of Justice and Microsoft Corporation. I argue that the D.C. Circuit\u27s rule has general applicability and should be recognized as the appropriate standard for software integration under antitrust law. I show how my approach imparts greater clarity to the D.C. Circuit\u27s rule. I examine the competing product integration rule proposed in 2000 by Professor Lawrence Lessig as amicus curiae in the government\u27s subsequent antitrust case against Microsoft, concerning the integration of Internet Explorer and Windows 98. My approach enables Professor Lessig\u27s analysis to be reconciled with the D.C. Circuit\u27s rule, but Professor Lessig\u27s rule, on its own, would contain serious shortcomings. Thereafter, I evaluate Judge Thomas Penfield Jackson\u27s April 2000 findings of law on the integration of Internet Explorer and Windows 98. I conclude that Judge Jackson\u27s approach, in contrast to the D.C. Circuit\u27s rule as refined by my approach, would harm consumers in the technologically dynamic market for computer software

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