Antitrust and Unfair Competition Law

Competition: Fall 2020, Vol 30, No. 2


By Josh Palmer1

"The Internet is a tidal wave. It changes the rules." When Bill Gates wrote this in an internal Memo to his executive staff in May 1995, it was in large part a warning that Microsoft had to focus on getting to the forefront of this wave or else have its dominant position in computing washed away. Microsoft’s ensuing practices would result in the United States Department of Justice (DOJ) filing an antitrust case against the company in 1998. A multitude of private actions in the U.S. followed, as did similar cases globally.

Twenty-five years after Gates’s memo, the Internet tidal wave seems to be cresting again. This time in the form of looming antitrust cases against companies that have enjoyed large success, by developing digital platforms that leverage the Internet (and other) capabilities Bill Gates highlighted in his Tidal Wave Memo.

In this article, I briefly review Microsoft’s conduct pursuant to Gates’s memo and the antitrust cases against Microsoft that followed. I then review the economic and antitrust lessons from the Microsoft cases as espoused by the authors of a widely used industrial organization textbook. I conclude by discussing what these lessons, combined with commentary from economists analyzing digital platforms and competition, suggest about the next wave of antitrust cases in these markets. Given the complexity of digital platforms and range of antitrust concerns that have been raised, this article in no way should be taken as exhaustive. Rather, I attempt to highlight some of the issues that seem most prevalent and interesting in the antitrust litigation context.2

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