Antitrust and the Internet

Hanno F. Kaiser · University of California, Berkeley, School of Law · Spring 2010

Class 1: Introduction and net neutrality (Part 1) January 14, 2010

Topics for discussion

• About this course
• How the Internet works
• Basics of antitrust regulation
• Arguments for net neutrality regulation

Required reading

• 2007 FTC Staff Broadband Report, Chapters I, III [link]
• FCC, Internet Policy Statement (2005) [link]
• Hogdman on Net Neutrality [link]

Optional

• Zittrain, The Future of the Internet, Chapters 1–2 (pp. 1–35) [link]
• Moglen, Freeing the Mind: Free Software and the Death of Proprietary Culture (2003) [link]
• Lessig & Lemley, The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era (2000) [link]
• Wu, The Broadband Debate: A User's Guide (2004) [link]
• Videos and transcripts from the FTC broadband workshop [link]
• Internet Society, All about the history of the Internet [link]

Class 2: Net neutrality (Part 2) and jurisdiction January 21, 2010

Topics for discussion

• Arguments against net neutrality regulation
• Discussion of the 2009 Open Internet Proposed Rulemaking
• Jurisdictional questions: FCC, FTC, DOJ

Required reading

• Comcast v. FCC (D.C. Cir. 2010) [link]
• In the Matter of Preserving the Open Internet, GN Docket No. 09-191 (October 22, 2009) (proposed FCC Rules) [link] [Excerpts: ¶¶ 65–66 (the proposed rules); ¶¶ 103–07 (non-discrimination); ¶¶ 135–39 (reasonable network management); ¶¶ 148–50 (managed or specialized services)]
• Sidak, What is the Network Neutrality Debate Really About?, International Journal of Communication 1 (2007), 377–388 [link]

Optional

• National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967 (2005) (Skip part III) [link]
• EFF, Is Net Neutrality a FCC Trojan Horse? (2009) [link]
• EFF weighs in on proposed net neutrality rules (2010) [link]
• EFF Comments to the FCC (2010) [link]
• MPAA Comments to the FCC (2010) [link]
• RIAA Comments to the FCC (2010) [link]
• Communications Act (1934/1996) [link]
• 2007 FTC Staff Broadband Report, Chapters II, IV [link] (good summary)
• Further reading (exclusionary conduct):
  • 2007 FTC Staff Broadband Report, Chapter VII (pp. 120–29) [link]
  • In re Madison River Communications LLC, Order, File No. EB-05-IH-0110, 20 F.C.C.R. 4295 (Enforcement Bureau, 2005) [link]
  • FCC v. Comcast Order (BitTorrent) (August 2008) [link] [¶¶ 41–56]
  • Lessig, Letter to FCC (2008) [link]

Class 3: Unilateral conduct and the U.S. v. Microsoft universe (Part 1) January 28, 2010

Topics for discussion

• On being "big and bad." Monopolization (U.S.) and abuse of a dominant position (EU)
• Antitrust and the Communications Act — implied immunity?
• Verizon v. Trinko (2004) [link]
• U.S. v. Microsoft (2001)
• Monopoly power
• Market power and the "application barrier to entry"

Required reading

• Monopolization:
  • Elhauge & Geradin, What Unilateral Conduct is Illegal?, Excerpt from Global Antitrust Law and Economics, pp. 248–57 [on bSpace]
  • Verizon Communications v. Law Offices of Curtis Trinko, 540 U.S. 398 (2004) [link] (Skip the concurring opinion.)
• U.S. v. Microsoft:
  • Melamed/Rubinfeld, U.S. v. Microsoft: Lessons Learned and Issues Raised, in: Antitrust Stories (2007) [link]
  • U.S. v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001) [link]. Read ¶¶ 45–58, i.e.: I. INTRODUCTION; A. Background; B. Overview; II. MONOPOLIZATION; A. Monopoly Power.

Optional

• Kaiser, Antitrust Primer, pp. 1–19 [link]

Class 4: The U.S. v. Microsoft universe (Part 2) February 5, 2010

Topics for discussion

• U.S. v. Microsoft (2001) (continued)
• Exclusive dealing (OEMs) (see also AMD v. Intel)
• Technological tying and "premature software integration" claims
• "Embrace, extend, extinguish" (Java)

Required reading

• Kaiser, Microsoft Monopolization Offenses Chart (2008) [link]
• U.S. v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001) [link]. Read ¶¶ 58–80, i.e.: II. MONOPOLIZATION […] B. Anticompetitive Conduct; C. Causation.

Optional

• Rubinfeld/Fisher, U.S. v. Microsoft, An Economic Analysis, The Antitrust Bulletin, Spring 2001, pp. 1–69 [link]

Class 5: Is giving stuff away for free predatory? February 12, 2010

Topics for discussion

• The law and economics of predatory pricing
• The economics of two-sided platforms

Required reading

• Anderson, Free (2009) [excerpts on bSpace]
• Brooke Group (Liggett) v. Brown & Williamson, 509 U.S. 209 (1993) [Read the excerpts from Gavil, Kovacic, Baker, Antitrust Law in Perspective, 2d. Ed. (2008) on bSpace, which also include an excellent discussion of the basic economics of predatory pricing] [link]
• U.S. v. Microsoft, 253 F.3d 34, 68 (D.C. Cir. 2001) [link] (focus on the IEAK discussion on p. 68)
• Evans and Schmalensee, The Industrial Organization of Markets with Two-Sided Platforms, CPI (2007) [link]

Optional

• Edlin, Predatory Pricing (2010) [link]
• faberNovel, Google's key success factors (2008) pp. 1–45 [link]
• TLF on Bottin Cartographes v. Google (French case) (2009) [link]
• Evans, Antitrust Issues Raised by the Emerging Global Internet Economy, Nw. UL Rev. (2008) [link]
• Ordover, Comments on Evans & Schmalensee's "The Industrial Organization of Markets with Two-Sided Platforms," CPI (2007) [link]

Class 6: Who owns platforms? February 19, 2010

Topics for discussion

• From Kodak (1992) to Newcal (2008): the aftermarket debate
• Defending integrated platforms: Apple v. Psystar (2008); Datel v. Microsoft (2009)

Required reading

• Eastman Kodak v. ITS, 504 U.S. 451 (1992) ("Kodak I") [link]
• Newcal Industries v. Ikon Office Solution, 513 F.3d 1038 (9th Cir. 2008) [link] (read only I and II(A))
• Apple, Inc. v. Psystar Corp., 586 F. Supp. 2d 1190 (N.D. Cal. 2008) [link] (read only the federal claims)
• Datel Holdings Ltd. v. Microsoft Corp., CV 09-5535 (N.D. Cal., November 20, 2009). Order [link]

Optional

• Salop, The First Principles Approach to Antitrust, Kodak, and Antitrust at the Millennium, Antitrust L.J. 187 (2000) [excerpts] [link]
• Shapiro, Aftermarkets and Consumer Welfare: Making Sense of Kodak, 63 Antitrust L.J. 483 (1995) [excerpts]
• Wall, Aftermarket Monopoly Five Years After Kodak (1997) [on bSpace]
• Datel Holdings Ltd. v. Microsoft Corp., CV 09-5535 (N.D. Cal., November 20, 2009). Complaint [link]. Motion to dismiss [link]

Class 7: Open and closed systems: Technological tying February 26, 2010

Topics for discussion

• U.S. v. Microsoft (2001) — Windows & IE
• Commission v. Microsoft (2004/07) — Windows & Media Player ("XP-N")
• Commission v. Microsoft (2008) — Windows & IE ("Choice Screen")

Required reading

• U.S. v. Microsoft, 253 F.3d 34, 85–97 (D.C. Cir. 2001) [link] (tying claim)
• Case T-201/04, Microsoft Corp. v. Commission, CFI 2007 [link]. Brief summary of the proceedings [link] and implementation [link]. Excerpts from Elhauge & Geradin on bSpace (tying claim).
• Case 39530, Microsoft (Tying). Commitments decision [link]. Choice screen (3/2010) [link].
• Larouche, The European Microsoft case at the crossroads of competition policy and innovation (2008) [link] (read part 3 on tying only, pp. 16–21)

Optional

• Panel discussion, The European Union Antitrust Case Against Microsoft and What it Means for Silicon Valley Companies (2007). Audio [link] (Ian Forrester's introduction is excellent and very funny. At the time of the panel, the CFI had not yet ruled on the case.)
• Microsoft, Timeline of the Commission v. Microsoft case from 1998–2007 [link]
• Draft Notice in respect of a notification lodged by eBay International A.G., Australian Competition and Consumer Commission (2008) [link]
• Kaiser, Infrastructure Theory and Essential Facilities (2009) [link]

Class 8: Open and closed systems: Digital Rights Management March 12, 2010

Topics for discussion

• Hot tying issues
• The "rapid success problem" — when no-market-power ties gain widespread acceptance
• Third party ties (e.g., phone and service)
• What if users are free to untie products after purchase?
• The iPod/iTunes System (pre March 2009)
• The Kindle and other content-DRM-device connections

Required reading

• VirginMega v. Apple, Conseil de la Concurrence (2004) [link]
• Apple iPod iTunes Litigation, Judgment on the Pleadings, Case No. 5:2005cv00037, N.D. Cal. (2009) [link]. (Note: Here's the docket: [link].)
• Sharpe/Arewa, Is Apple Playing Fair? Navigating the iPod FairPlay DRM Controversy (2007) [link]

Optional

• Farrell/Weiser, Modularity, Vertical Integration, and Open Access Policies (2003) [link]
• Katz/Shapiro, Systems Competition and Network Effects (1994) pp. 1–24
• Frischmann & Weber-Waller, Revitalizing Essential Facilities, Antitrust L.J., Vol. 75, 1–66 (2008) [link]
• Doctorow, Microsoft DRM talk (2004) [link]
• von Lohmann, DRM: What is it good for? (2006). Audio [link]

Class 9: Collusive agreements: From BMI to the Google Book Settlement (Part 1) March 26, 2010

Topics for discussion

• Price fixing, territorial allocation, group boycotts
• Ancillary restraints analysis
• The Google Book Settlement (Part 1)

Required reading

• BMI v. CBS, 441 U.S. 1 (1979) [link] [excerpt]
• Google Book Settlement Agreement 2.0 [link] [excerpt]
• von Lohmann, EFF analysis of the Google Book Settlement (2009) [parts 1, 2, 3, 4, 5]

Optional

• Calkins, BMI v. CBS, 441 U.S. 1 (1979), in: Antitrust Stories [link]
• Elhauge, Framing the Antitrust Issues in the Google Books Settlement (2009) [link]. More detailed article: [link]
• Lemley, An Antitrust Assessment of the Google Book Search Settlement (2009) [link]

Class 10: The Google Book Settlement (Part 2) April 2, 2010

Topics for discussion

• The Google Book Settlement (Part 2)
• What is the correct baseline for innovative products?

Required reading

• Author's Guild v. Google, DOJ Statement of Interest regarding Proposed Amended Settlement, 2/4/2010 [link]

Optional

• Picker, The Google Book Search Settlement: A New Orphan-Works Monopoly?, Journal of Competition Law and Economics (2009) [link]
• Picker, Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement (2009) [link]

Class 11: Merger analysis in markets with network effects — open source April 9, 2010

Topics for discussion

• Open source, free software, and antitrust (Wallace v. FSF)
• Introduction to merger analysis — the Guidelines
• U.S. v. Oracle (2004)
• Comcast/NBC (2010)

Required reading

• Open source:
  • Stallman, The Free Software Definition [link]
  • Wallace v. IBM, 467 F.3d 1104 (7th Cir. 2006) [link]
• Horizontal merger analysis:
  • FTC & DOJ, Proposed 2010 Horizontal Merger Guidelines [link]
  • Kaiser & Wall, What the New Merger Guidelines Mean for Technology Companies (2010) [link]
  • U.S. v. Oracle, 331 F. Supp. 2d 1098 (N.D. Cal. 2004) [link]. Read the excerpts on bSpace.
• Vertical merger analysis:
  • New York Times Editorial, Concerns about Comcast-NBC, 12/6/2009 [link]
  • Thierer, A Brief History of Media Merger Hysteria (2009) [link]

Optional

• Open source:
  • GPLv3 [link]
  • What is copyleft? [link]
  • Smith, A Quick Guide to GPLv3 [link]
  • Bond, What's so Great About Nothing? The Gnu General Public License and the Zero-Price-Fixing Problem (2005) [link]
• Mergers:
  • Blumenthal, Why bother? (2004) [link]
  • Shapiro & Farrell, Mergers with Unilateral Effects, Presentation (2008) [link]
  • Katz and Shelanski, Mergers and Innovation, Antitrust Law Journal (2006) [excerpts] [link]
  • Sidak/Teece, Rewriting the Horizontal Merger Guidelines in the Name of Dynamic Competition (2009) [link]
• Vertical mergers:
  • Kaiser, Antitrust Primer, pp. 21–22, 30–39 [link]
  • AOL & Time Warner, Inc., FTC Dkt. No. C-3989 (Apr. 17, 2001) (consent order) [link]
  • Rubinfeld/Singer, Open Access to Broadband Networks: A Case Study of the AOL/Time Warner Merger (2000) [link]

Class 12: Oracle's acquisition of Sun Microsystems April 16, 2010

Topics for discussion

• Oracle/Sun (2010)

Required reading

• Commission Decision, M.5529 Oracle / Sun Microsystems, 1/21/2010 [link]
• Monty Program AB Submission to the EC, opposing the transaction (2009) [link]
• Marten Mickos, Open Letter to EC (2009) [link]
• Stephen O'Grady, Oracle, MySQL and the EU: The Q&A (2009) [link]

Optional

• faberNovel, Business Models of Open Source and Free Software (2007) [link]
• Moglen, The European Commission and Oracle/Sun (2009) [link]
• Microsoft/Novell, Open Letter to the Open Source Community (2006) [link]
• DOJ, Statement on the EC's Decision re Oracle/Sun (2009) [link]

Class 13: "Search deals," online advertising, and joint ventures April 28, 2010

Topics for discussion

• How the "currency exchange" from traffic into money works — the law & economics of online advertising
• Google/Doubleclick (2007)
• Yahoo/Google (2008)
• Yahoo/Microsoft (2010)

Required reading

• Google/Doubleclick (FTC) (2007) [link]
• DOJ Press Release, Yahoo/Google abandon their advertising agreement (2008) [link]

Optional

• Katz & Shapiro, Antitrust in Software Markets (1999), pp. 29–54 [link]
• Google/Doubleclick (EC) (2007) [link]
• Hahn/Singer, An Antitrust Analysis of Google's Proposed Acquisition of DoubleClick, SSRN (2007) [link]
• Lande, The Microsoft-Yahoo Merger: Yes, Privacy is an Antitrust Concern (2008)

Class 14: Review session April 30, 2010

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