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| Article Name : | | | ECONOMIC LESSONS FROM THE IBM AND THE MICROSOFT CASES | | Author Name : | | | Nidhi Gupta | | Publisher : | | | Ashok Yakkaldevi | | Article Series No. : | | | ROR-710 | | Article : | |  | Author Profile | | Abstract : | | | This paper presents an interesting economic analysis of two classic antitrust cases in the US history – The US v. IBM and The US. v. Microsoft. The cases illustrate two particular facts – one, that innovation (with or without monopoly) can lead to socially beneficial actions that competitors dislike (IBM Case); and second, leveraging, packaged in form of innovation, can be used to preclude the possibility of new innovations that could otherwise destroy the existing monopoly (Microsoft Case). Here it goes without saying that the question of monopoly leveraging (misuse of monopoly) cannot arise until presence of monopoly is justified. These cases nicely fit into a similar realm of analysis as they both revolve around the charges of monopoly leveraging and issues of bundling. Still, both considerably differ in terms of the facts involved and hence have particularly diverse results to offer. The economic investigation of these cases reveals that IBM's act reflected 'superior skill and foresight' while what Microsoft did was abuse of monopoly in one market to shut-out competition in new areas that could affect the original monopoly. Section I of the paper discusses the basic backdrop and understanding of both the cases. This is followed by Sections II and III that analyze both the cases respectively. Section IV summarizes the differences between the two cases and the last section concludes by giving some final words on what we can learn from these cases. | | Keywords : | | - Bundling,Bundling,Bundling,Bundling,
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