The Next Big Thing

Allen Grunes, Dec 12, 2012

Pop quiz: What do antitrust cases involving the leading PC operating system, a national association’s rules about real estate listings, and a joint venture between a cable company and a movie studio have in common?

Hint: Not the statute involved. One was Sherman, one was Sherman and one was Clayton.

Answer: They were all about competition to be the “next big thing.”

Quite a lot has been written on the importance of innovation to the U.S. economy, and how, if at all, antitrust enforcement can promote or protect innovation. The aim of this short article is slightly different. Enforcement actions are where the rubber meets the road, so in some sense they tell us more than speeches and policy documents.

In this article I look at how the U.S. Department of Justice (“DOJ”) approached innovation in the National Association of Realtors and Comcast/NBC Universal cases. While it is difficult to draw conclusions from only a couple of data points, I outline the ways in which DOJ seems to have developed an internally consistent approach toward exclusionary conduct in the digital world. I do not see the same kind of consistency over at the Federal Trade Commission (“FTC”). Google is the great unknown as I write this. But based on the FTC’s decision to close its investigation of the Universal/EMI merger, I am not overly optimistic about the prospects of a Google case. One conclusion that may be drawn is that DOJ benefitted institutionally from fully litigating the Microsoft case, while the FTC has paid a price for not fully testing an innovation theory in court. As it stands now, there seems to be something of a “digital divide” between the DOJ and FTC.

Links to Full Content