In Defense of Monopoly

Abstract

With renewed dedication, antitrust enforcers on both sides of the Atlantic appear intent on saving the world from the evils of monopoly. Microsoft has been the poster firm for targeted antitrust enforcement in the United States since the early 1990s. The Justice Department in the Clinton Administration took the software giant to court in 1998 for using its market dominance, protected by the so-called “applications barrier to entry,” to “bolt” its Web browser, Internet Explorer, to the Microsoft Windows operating system and thus to destroy the alternative browser, Netscape, and undercut competition and consumer welfare—supposedly.¹ After a rough ride through the federal district court (in which the presiding judge discredited himself by revealing a private animus toward Microsoft in a secret media interview while the trial was underway), an appeals court agreed that Microsoft was a “monopoly,” but found no anticompetitive fault with Microsoft’s enhancing Windows with its browser Internet Explorer (besides, by the time of Microsoft’s trial all other available operating system developers had done the same thing, understandably, given the Internet’s then rapid growth in importance to computing).