Remedies, Antitrust Law, and Microsoft: Comment on Shapiro

Competition Policy and Antitrust

Article Snapshot


Keith Hylton


Antitrust Law Journal, Vol. 75, No. 3, ABA, 2009; conference paper from the Searle Symposium, “The End of the Microsoft Antitrust Case?”, Nov. 15-16, 2007


This paper asks if antitrust decisions that punish Microsoft will benefit consumers.

Policy Relevance

A court order taking away Microsoft’s monopoly and restoring competition would harm consumers. The court’s more narrow remedy in that case was appropriate.

Main Points

  • In antitrust cases, orders strong enough to discourage illegal conduct in the future can do more harm than good by discouraging firms from innovating to benefit consumers.

  • The large market share of Microsoft’s Windows operating system made it hard for rivals to compete (the “applications barrier to entry”), but helped consumers by offering a standard product used by many other software developers.

  • Over time, Microsoft included more software with Windows at a low price, software earlier sold separately at a higher price. Microsoft did this because of pressure from competitors.
    • Microsoft’s introduction of Internet Explorer harmed Netscape, but benefitted consumers, as it was offered for free and evolved into a superior product.

  • Requiring a firm like Microsoft to give up monopoly profits discourages entry by future competitors hoping for a share of those profits. Because Microsoft’s monopoly greately benefitted consumers, the remedy should not take away those benefits.

  • The best remedy would simply stop Microsoft from acting illegally in future, doing as little as possible to discourage innovation and investment. This is what the courts did in the Microsoft case.

  • Even an order simply stopping a firm from acting illegally can be harsh, because other countries and private firms often use the order a basis for their own antitrust cases.

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