4. The actions undertaken by the monopolist had the goal of blocking competition rather than being acts of competing.

The “efficiency defenses” in which a firm shows that its actions are ordinary efficient business practices rather than attempts to avoid competition are an important part of competition policy. Microsoft’s defense team had little success in arguing that the various contracts had an efficiency defense, largely because the firm’s own documents so thoroughly belied the explanations they brought forward.

Items 1-4 are why the most anti-interventionist appeals court in the United States sustained the government’s case. The Court of Appeals interpreted the US antitrust law banning monopolization in a way that follows the core economic logic of monopoly maintenance cases like U.S. v. Microsoft.

A second analytical point arises because points 1. and 2., taken together, imply that there are two possible competitive futures. One possible future has continued monopoly, while the other has more competition. The possibility of different competitive futures is central to competition policy, of course. Only if there are different possible competitive futures is there any logical possibility that private action can reduce competition, or that public action can increase it.

The Microsoft defense team attempted to show that points 1. and 2. were a logical contradiction – that is, they attempted to show that it was not possible that there both be a monopoly and a threat to it. Since that argument is ridiculous on its face, the defense team attempted to bury it in a formalistic use of market definition analysis. They argued that the government’s market definition – which showed what everyone in the economy knows, that Windows is a monopoly – was flawed because excluded the threatening technologies. The problem with this argument is clear when f we translate it back from its formalistic language. The argument “proves” that there is no such thing as a monopoly subject to threat of potential entry, a silly conclusion.

The second problem with the defense team’s argument was that it so thoroughly contradicted the business analysis undertaken inside Microsoft the firm to guide strategy. I have reviewed those business analyses elsewhere in detail (cite xxx). Suffice it to say here that much of the internal decision making in the firm about products, markets, technologies, internal organization, and other areas centered on the Windows monopoly and the potential competitive threat posed by the Internet entrepreneurs.

Once the possibility of two competitive futures is established, there remains to be shown that the incumbent monopolist undertook an anticompetitive action. This is the second element of a monopoly maintenance claim. Elements 3 and 4 above demonstrate that the effort of the incumbent monopolist is to change from one potential competitive future to another. That is what is – and should be – illegal.

Many scholars and legal analysts have suggested that antitrust violations in which a monopolist rids itself of competitors (other than by competition on the merits) are very rare. A fringe has suggested such cases are nonexistent. The next analytical lesson of Microsoft is that these violations can and do occur in real markets. Indeed, they can and do occur in extremely important markets and technologies, like the personal computer operating system (Windows) and the browser.

Opportunities for effective entry and competition against the Windows operating system are rare. It takes something as potentially disruptive as the widespread use of the