Sidak Proposes Antitrust Rule for Software Integration

What is the proper legal standard for product integration involving software? In his article, "An Antitrust Rule for Software Integration," published in the winter 2001 issue of the Yale Journal on Regulation, J. Gregory Sidak argues that because software is subject to low marginal costs, network effects, and rapid technological effects, the Supreme Court's existing antitrust rules on tying arrangements, which evolved from industries not possessing such characteristics, are inappropriate. Sidak reviews the Court's tying decisions in Jefferson Parish and Eastman Kodak. He proposes an approach to judging the lawfulness of product integration in technologically dynamic markets that supplements the Supreme Court's current standard with four additional steps in cases of tying of computer software. He then examines the D.C. Circuit's approach to software integration, which arose from that court's 1998 interpretation, in Microsoft II, of an antitrust consent decree between the U.S. Department of Justice and Microsoft Corporation. The D.C. Circuit's rule has general applicability, Sidak argues, and should be recognized as the appropriate standard for software integration under antitrust law. Sidak examines the competing product integration rule proposed in 2000 by Professor Lawrence Lessig as amicus curiae in the government's subsequent antitrust case against Microsoft, concerning the integration of Internet Explorer and Windows 98. Sidak's approach enables Professor Lessig's analysis to be reconciled with the D.C. Circuit's rule, but illustrates that Professor Lessig's rule, on its own, would contain serious shortcomings. He evaluates Judge Thomas Penfield Jackson's April 2000 findings of law on the integration of Internet Explorer and Windows 98. Judge Jackson's approach, in contrast to the D.C. Circuit's rule as refined by Sidak's proposed approach, and would harm consumers in the technologically dynamic market for computer software.