Innovation and Competition in the Digital Network Economy

Through an in-depth analysis of the Korea Fair Trade Commission (KFTC) case—which led to a December 2005 decision, currently under appeal at the Seoul High Court, condemning three fundamental tying practices embedded in Microsoftand’s global business strategy—the author clearly establishes the precise nature of Microsoftand’s anticompetitive practices, complete with clear technical descriptions of the underlying applications and digital media systems. The discussion develops valuable guidelines on such core issues as the following:

•network effect, tipping effect, and lock-in effect

•separability of Microsoftand’s tied and tying products

•forced purchase by consumers of multiple tied products

•Microsoftand’s reinforcement of market entry barriers

•Microsoftand’s “normal business practice” defense

•cumulative damage to consumersand’ interests

The bookand’s ultimate legal and economic assessment clarifies ways in which government competition authorities can select from globally available options on a case-by-case basis, enforce re-pricing measures, avoid belated remedies, and continuously monitor new types of anticompetitive conduct.