In this issue:
The Court of First Instance’s Decision in Microsoft
Background, case history and related materials on Microsoft v. Commission decided by the European Court of First Instance.
Every MBA program in every country teaches students to compete using the “four P’s” of marketing: price, product, place, and promotion. So when Microsoft began distributing its media player with its operating system, it would seem that it was competing by taking advantage of its low cost distribution channel (“place”) and by improving functionality (“product.”)
The European Court of First Instance, through its decision in Microsoft v. Commission, dealt a one-two punch to incentives to innovate. First, by penalizing Microsoft for bundling its Media Player with Windows, the court will make companies reluctant to add innovative features to their products. Second, by sanctioning Microsoft for not disclosing fundamental innovations to its server software to its rivals, the court will make companies think twice before investing in costly research and development (R&D).
The consequences of the CFI’s decision are significant both for Microsoft and the computing indus