Oops, They Did it Again: What We Didn’t Learn From U.S. v. Microsoft

Larry Downes, Oct 31, 2011

On Aug 31, 2011, the Department of Justice, joined later by seven state attorneys general filed suit to block AT&T’s pending merger with T-Mobile USA. To be sure, the Department of Justice has never expressed any regret over the Microsoft case or any other recent antitrust action. But the decision to sue has plenty of self-interested fans, including AT&T competitors Sprint and Cellular South as well as advocacy groups in Washington who believe every merger will end the consumer internet as they know it.

Though different provisions of antitrust law apply to the two cases, both lawsuits repeat the same fatal flaws:

  1. Both rely on a definition of the “relevant market” that is narrow and static.
  2. Both cling to old models of economic analysis better suited for mature industrial age markets than to rapidly-evolving information markets, where new categories of products and services rise and fall in the time it takes to bring a case to appeal.
  3. Both cases pursue sweeping remedies with little regard for their structural impact, either on the defendant or on fast-growing consumer markets.