Antitrust lawsuits often “sound good” as they essentially promise to promote market competition. But such lawsuits might, as legislation often is, aimed at problems that are going away.
United States v. Microsoft Corp. (May 18, 1998): This was the primary lawsuit filed by the U.S. Department of Justice (DOJ), joined by 20 states. It alleged that Microsoft engaged in anti-competitive practices, primarily related to bundling Internet Explorer with Windows and hindering other browser competitors like Netscape.
The argument at the time was that the lawsuit was necessary to reduce monopoly power. Microsoft held a dominant position in the operating system market and was said to use bundling and other tactics to squeeze out competitors.
The particular case in point was bundling of a browser with the OS. With hindsight, we might question the necessity of the action.
The antitrust decision that prevented bundling of Internet Explorer with the operating system seems to have had limited impact on OS or browser market share.
Despite the antitrust case, Microsoft maintained its dominant position in the OS market, though some might argue that the rise of Google’s Chrome browser might have been helped by the “no bundling” rules.
Critics argue the issue was self-correcting as the rise of the internet diminished the importance of desktop operating systems as “gatekeepers.” And almost nobody believes that a user’s choice of browser has much of any impact on market shares of internet apps and services.
On the other hand, some might argue that the dominance of the Chrome browser is partly because it is pre-bundled with the popular Android operating system. But others might note that Chrome benefits from
A user-friendly interface; speed and performance advantages; cross-platform integration; a substantial extension library and frequent updates and improvements.
Still, it can be argued that no device operating system or browser offers gatekeeper power in the internet era.
Another example of major regulatory change was the U.S. 1996 Telecom Act, which aimed to promote voice competition in the telecom industry. As the act itself stated, “it is the purpose of this Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers, to encourage the rapid deployment of new telecommunications technologies and services to all Americans, and to provide for the orderly transition of the telecommunications industry from its monopoly past to a competitive future."
As a practical matter, that meant rules to increase competition in the voice services market.
Of course, all that happened in the context of the emergence of the internet, which we might all agree changed the focus of “telecommunications” from voice to data and internet access, while the importance of “mobile” services also increased rapidly.
While it can be argued that the Telecom Act helped propel those changes, many observers would argue the changes happened largely in spite of the act, and not “because of it.” The mobile business already was competitive (multiple major providers) while the data access business always was unregulated.
The Telecom Act mostly had a practical effect on fixed network services and voice, a segment that was destined to become a minor part of the total business.
As that precedent applies to present-day efforts to “regulate” a few hyperscalers, we might suggest that “something” will be done, but that the actual rules will do very little to damage market leadership or the state of competition.
If anything, Microsoft has become a bigger competitor since it was subject to antitrust regulation.
Some will argue that the antitrust action “forced” Microsoft to look elsewhere for growth, leading to cloud computing, more emphasis on productivity suites and gaming, for example. So some would argue that the few hyperscalers targeted for action will find other ways to keep growing, no matter what the proposed remedies related to the lawfulness of “alternative payments.”
So some might argue new European Union rules on Apple’s app store, forcing Apple to allow use of third-party payment systems, will limit App Store dominance in some way. Others might argue that Apple will simply find ways to limit the damage.
As with the Telecom Act of 1996, which some argue did diminish dominance in long-distance calling and local voice services, others will argue those products were destined to shrink to near insignificance as revenue drivers within the industry, as mobility and internet access emerged as the industry revenue drivers.
So did the Act actually “work,” or was it aimed at a “problem” (lack of competition for voice services) that was going to go away in any case?
And will "remedies" for hyperscaler dominance also ultimately fail?
