Innovation and Competition in the Digital Network Economy

Dozens of cases worldwide continue to challenge Microsoft Corporation's superdominance of the global digital network economy, focusing in particular on the multi-tying practices that leverage Microsoft's market power into adjacent markets and reinforce its dominance. This is the first book to analyze this international line of cases, detailing both grounds for legal action (including unfair competition, restriction of consumers' freedom of choice, abusive pricing) as well as Microsoft's defenses and administrative settlements. The author also demonstrates the serious economic repercussions of Microsoft's monopoly, such as accumulation of inefficiency and stifling of innovation in this crucial sector of twenty-first century economy and society.Through an in-depth analysis of the Korea Fair Trade Commission (KFTC) case - which led to a December 2005 decision, currently under appeal at the Seoul High Court, condemning three fundamental tying practices embedded in Microsoft's global business strategy - the author clearly establishes the precise nature of Microsoft's anticompetitive practices, complete with clear technical descriptions of the underlying applications and digital media systems. The discussion develops valuable guidelines on such core issues as the following: network effect, tipping effect, and lock-in effect; separability of Microsoft's tied and tying products; forced purchase by consumers of multiple tied products; Microsoft's reinforcement of market entry barriers; Microsoft's "normal business practice" defense; and cumulative damage to consumers' interests.The book's ultimate legal and economic assessment clarifies ways in which government competition authorities can select from globally available options on a case-by-case basis, enforce re-pricing measures, avoid belated remedies, and continuously monitor new types of anticompetitive conduct.In its analytic rigor, focus on important economic issues, and its unwavering commitment to fair competition, this book will be of immeasurable value to practitioners and policymakers at every level concerned with the digital network economy, now and in the years to come.