Is Android Case Like Microsoft? Antitrust Cases Turn on Facts
Stephen Houck, Special Counsel to Offit Kurman, P.A., played a prominent role in the prosecution of the government’s monopolization case against Microsoft’s Windows operating system. Mr. Houck has authored a paper on the viability of a similar enforcement action directed at Google’s Android operating system, which is previewed in the following guest post.
The ongoing discussion about the appropriate role of antitrust law in the high tech sector invariably invokes references to the government’s enforcement action with respect to Microsoft’s Windows operating system. Some commentators have called for a similar action directed at one or more of the current leading high tech companies like Amazon, Apple, Facebook or Google. It is particularly timely to consider the viability of an enforcement action as to Google’s Android operating system given recent events in Europe.
Any U.S. antitrust case based on alleged single firm misconduct, particularly in the high tech sector, will have to pass muster under the still authoritative, closely reasoned Microsoft decision rendered by a unanimous en banc D.C. Circuit in 2001. While Chief of New York State’s Antitrust Bureau, I played a leading role in the state plaintiffs’ prosecution of that case – including discovery, the decision to file the complaint, the trial on the merits and subsequent enforcement matters – and I am well positioned to assess its applicability to Android.
To succeed in a Section 2 case, a plaintiff must first establish that the defendant possesses monopoly power in a relevant market. Second, a plaintiff must show that the defendant has willfully acquired or maintained its monopoly power by unlawful means rather than as a consequence of “a superior product, business acumen or historic accident.”
The Microsoft court stressed the critical importance for market definition of the existence of a “high” structural barrier to entry protecting the allegedly monopolized product from competition. There was such a barrier protecting Windows – the applications barrier to entry. There is no comparable barrier protecting Android. Moreover, unlike Windows, Android is open source, suggesting that Google lacks the defining feature of monopoly power: the ability to set and control prices. In addition, contrary to the situation for PC operating systems in the 1990s, consumers today can and do readily switch mobile devices running on different operating systems, whether they be Android, alternative open source versions of Android, or proprietary products like Apple’s iOS. In a properly defined market, Google does not have monopoly power, much less the large stable market shares enjoyed by Windows.
Nor has Google engaged in the type of anticompetitive conduct condemned in Microsoft. Unlike Microsoft, Google did not embark upon a multifaceted campaign that had the purpose and effect of “substantially” foreclosing competitors’ access to the market. On the contrary, Android original equipment manufacturers (OEMs) and consumers are free to preload and install applications that compete with Google’s, and consumers can even do so via Google’s own Play Store. The advent of Android has dramatically increased consumer choice and created downward pressure on prices. As the D.C. Circuit stressed, there is nothing inherently wrong with bundling software and, to the extent Google has done so, a court is likely to consider it procompetitive not anticompetitive because it promotes interbrand competition, increases product stability, and does not foreclose use of rival applications. Bottom line, Google’s conduct bears little relationship to Microsoft’s in kind or effect.
A fundamental tenet of antitrust analysis is that facts are all-important, and they are frequently outcome determinative. As developed more fully in my paper, I believe that the facts that gave rise to liability in Microsoft and that exist with respect to Android, despite some superficial similarities, are strikingly different in aspects critical to any competition analysis. Indeed, both the facts of that case and the reasoning of the D.C. Circuit demonstrate, in my view, that any enforcement action directed at Android is highly unlikely to succeed.
The paper, “Android – Is There a Viable Monopolization Case?” is available here on the Social Science Research Network.