Silicon Valley Antitrust
Hanno Kaiser
U.C. Berkeley, Boalt Hall School of Law, Spring 2012
Friday 8 - 9:50 am, Room 10
Evolving Syllabus! Please check out the latest version
Textbooks:
Class 1: Introduction; Google Search and Google+ (January 13, 2012)
On January 10, 2012, Google started integrating Google+ into the Google search engine. Is this connection between two services (search and social networking) an antitrust problem? This recent development will serve as the launching pad for our discussion of the “Google Antitrust Universe.”
a. Topics for discussion
- Monopolization and abuse of dominance
- Enforcement models in the U.S. and in the EU
- Can there be “monopoly power” if users are free to go elsewhere?
- Does it matter that the product is free?
- Multi-sided platforms: advertisers go to where the users are
- Why “Silicon Valley Antitrust Law”? Is there a “New York Antitrust Law” as well?
b. Required reading
c. Optional reading
Class 2: The Microsoft Universe, Part 1 (January 20, 2012)
The Microsoft cases in the U.S. and the EC are among the most important precedents for high-technology antitrust. They address key questions of market definition, multi-sided platforms, product integration, offensive and defensive uses of monopoly power, and remedies. We will examine the Microsoft cases in depth and use them as the backdrop against which to examine more recent matters.
a. Topics for discussion
- Market definition and market power
- The first part of the U.S. v. Microsoft case: Market definition and market power
b. Required reading
- Hanno Kaiser, Excerpt on Market Definition (2009). On bSpace.
- U.S. v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001).
Read pages 45–58, i.e.:
I. INTRODUCTION
A. Background
B. Overview
II. MONOPOLIZATION
A. Monopoly Power; also, print out the table of contents.
c. Optional reading
- Elhauge, Geradin, Global Antitrust Law and Economics, pp.248–256. (Excellent overview of Section 2 and Art. 102; highly recommended as a quick review of core concepts. Excerpts are posted on bSpace.)
Class 3: The Microsoft Universe, Part 2 (January 27, 2012)
a. Topics for discussion
- The anticompetitive strategies playbook
- Combination
- Exclusion
- Leveraging
- Indirect “defensive” strategies in multi-sided markets
b. Required reading
c. Optional reading
Class 4: The Microsoft Universe, Part 3 (February 3, 2012)
a. Topics for discussion
- Tying in the U.S. and in the EU
- Microsoft 10 years later: Who won?
- U.S. v. Microsoft as a roadmap to the FTC’s investigation of Google? Similarities and differences.
b. Required reading
c. Optional reading
Class 5: High-tech labor markets: No-“cold call” agreements? (February 10, 2012)
Employee-plaintiffs claim that their employers agreed not to cold-call each others’ employees. Sensible self-regulation or unlawful horizontal coordination?
a. Topics for discussion:
- The Silicon Valley labor market
- “Non-compete agreements v. non-solicitation agreements”; Silicon Valley v. Silicon Alley
- Immigration patterns and innovation
- Review of horizontal agreements in the U.S. and in the EU
- Per se and rule of reason analysis
- Naked restraints
- Ancillary restraints
b. Required reading
- Hovenkamp, Antitrust (2011), pp.95–104, 122–126.
- U.S. v. Adobe Systems, Inc., Apple Inc., Google Inc., Intel Corporation, Intuit, Inc., and Pixar (2011)
c. Optional reading
- In re High-Tech Employee Antitrust Litigation, Defendants’ Motion to Dismiss (2011) (on bSpace)
- In re High-Tech Employee Antitrust Litigation, Plaintiffs’ Opposition to Defendants’ Motion to Dismiss (2011) (on bSpace)
Class 6: The law of “predatory innovation”. Showdown in the CPU industry: FTC and EC v. Intel. (February 17, 2012)
a. Topics for discussion
(1) Did Intel abuse its dominant position in the x86 CPU market by using various business tactics and technological design choices aimed at (i) defending its CPU monopoly and (ii) extending its CPU monopoly into the GPU market?
(2) A builds disk drives for B’s mainframes. B changes the interface. A’s disk drives are obsolete. Innovation or predation?
(3) A builds audio chips for smartphones. B builds graphics processors. B includes audio functionality into its new graphics processor. A’s business tanks. Efficient integration or anticompetitive foreclosure?
(4) B sells audio, graphics, and sensor modules. A sells audio modules only. B gives its customers a 25% across the board rebate if they buy all three components from B. A can’t match the discount on audio modules alone. Good deal for the buyer or below-cost bundled pricing?
b. Required reading:
c. Optional reading
Classes 8 and 9: Patent portfolio acquisitions and abuse of standard-essential patents
a. Topics for discussion
A acquires a large patent portfolio ‘to defend its ecosystem.’ Defensive move to minimize the threat of a patent holdup or procurement of ammunition to extract differentiating IP from others?
B seeks an injunction against C on the basis of FRAND-encumbered standard essential patent that B acquired from A. Monopolization?"
Reading materials:
Class 10: Open v. closed systems (Part 1)
(1) “Open systems win.” Jonathan Rosenberg, Google.
(2) “Open systems [are] good for making others lose.” John Prentice, Gartner.
(3) “Closed systems are prima facie suspect, while open systems can never be an antitrust problem." Useful antitrust rule or analytical fallacy?
(4) A sells games for B’s gaming console. B starts requiring pre-approval of the game concept and final approval of the finished game as a condition for a license to B’s console. Sensible quality control measure or monopolization of the aftermarket for B-console games?
a. Topics for discussion:
- The political philosophy of open systems
- The economics of platforms
- The players: system sponsors, users, contributors
- Platforms as “managed economies”
- “More is not always better” How platform rules emerge.
- Single platform aftermarkets
- Examples: Gaming platforms (XBOX, PS3, Wii), mobile (Andorid, iOS, Blackberry, Windows), online stores (eBay, Amazon)
b. Reading:
- Kaiser, Are Closed Systems an Antitrust Problem?, Competition Policy International 91, Vol.7, No.1 (2011)
- Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne, Opening Platforms: How, When and Why? (2008)
- David S. Evans, Andrei Hagiu and Richard Schmalensee, Invisible Engines (2006)
- Apple, Inc. v. Psystar Corp., 586 F. Supp. 2d 1190 (N.D.Cal. 2008)
- Datel Holdings Ltd. v. Microsoft Corp., CV 09–5535 (N.D. Cal., November 20, 2009)
Class 11: Open v. closed systems (Part 2)
a. Topics for discussion
[TBD]
b. Reading
Class 12: Mergers: Buying future products
A acquires B. Some customers say that B’s pipeline products would likely be a good alternative to A’s products, but B’s products are more likely to make it to market if they are supported by A’s R&D and distribution infrastructure. Efficient merger to ensure that new products come to market more quickly and with greater certainty or substantial lessening of future competition?
a. Topics for discussion include:
- Potential competition and innovation markets
- The 2010 U.S. Horizontal Merger Guidelines
- Agency practice v. court decisions
b. Reading:
Class 13: Social networks: Virtual property and real market power?
(1) Social media platform A introduces its own in-game currency to the exclusion of other in-game payment mechanisms. Abuse of a dominant position?
(2) Search engine A introduces a new social network. Shortly thereafter, it lets search users jump directly to its social network brand pages. Improper leveraging of search market power into the social network space?"
a. Reading materials
b. Optional reading
c. Seriously optional reading
Class 14: Open source and antitrust
A sells proprietary databases and services for open source operating systems. B owns the copyright to and sells services for open source databases. A acquires B. Is the acquisition a boon for or threat to B’s open source database?
a. Topics for discussion:
- The political philosophy of open source
- The economics of open source software
- Revenues from services, complements, dual licenses
- Strategic reasons for promoting open source
- “Zero dollar” price fixing?
- Acquisition of open source assets to control dynamic innovation?
b. Reading materials: