On March 1, 2008, AOL officially pulled the plug on the Netscape Browser, killing off the killer app of 1995 whose success had led Microsoft on an exclusionary campaign which eventually triggered the now-famous Microsoft monopolization litigation. Although the government plaintiffs in the United States were eventually successful on the merits in the monopolization litigation, Netscape's death highlights the problem of remedy. Microsoft retains its monopoly position in the desktop PC operating system market; Microsoft's Internet Explorer browser still has nearly 75 percent of the browser market, despite the challenge from the technologically superior Firefox browser. The European Commission's parallel case has fared no better. Microsoft was found to have abused its dominant position by tying its media player to Windows and by refusing to disclose necessary server-system interoperability information. But the Commission's media player unbundling remedy failed completely and its interoperability order has not halted Microsoft's progress toward dominance in the work group server operating system market. In fact, in 2008, after imposing more than $2.3 billion in fines on Microsoft for the initial violations and Microsoft's failure to comply with the Commission's remedy orders, the Commission announced that it was opening two new investigations into Microsoft, one of which involves the tying of Internet Explorer to Windows.
This paper explores the problems of remedy in monopolization cases, using the Microsoft litigation as an exemplar. In the paper I argue that we have paid too little attention to remedy issues and that Microsoft teaches us at least three things about remedies: (1) Enforcers need to give more consideration to potential remedies prior to bringing monopolization cases. (2) Enforcers need to consider the full panoply of remedial options, including restructuring and fines. (3) Greater attention needs to be paid to evaluating remedies, including articulating goals and establishing benchmarks for measuring progress.
The paper is in three parts. The first reviews the Microsoft litigation in the U.S. and EU, including private damages suits. The second reviews the remedies imposed in the U.S. and EU. The third focuses on the implications for the remedies debate, covering the political economy of remedies, remedial options, the craft of remedies, and multiple enforcement.
Date of Authorship for this Version
First, Harry, "Netscape is Dead: Remedy Lessons from the Microsoft Litigation" (2008). New York University Law and Economics Working Papers. 166.