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Antitrust and Innovative Industries

FRANKLIN M. FISHER Massachusetts Institute of Technology (MIT) - Department of Economics

Abstract:

    This paper discusses the currently popular question of whether the antitrust laws and standard antitrust analysis apply or ought to apply to industries characterized by rapid innovation. It draws heavily on Microsoft and concludes that the answer is affirmative. Microsoft was not prosecuted because it was innovative (despite a public relations campaign to the contrary). It was prosecuted (and lost) because it undertook acts that had no profitable consequence save the protecting of Microsoft's monopoly power. Courts ought not to refuse to examine the anti-competitive consequences of actions associated with innovations. To do so would be to immunize anti-competitive behavior, no matter how serious the consequences, if wrapped in an innovation, no matter how trivial the benefits. That would be an open invitation to anti-competitive acts in innovative industries.
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