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Innovation and Monopoly Leveraging

Innovation and Monopoly Leveraging

Fisher, Franklin M., "Innovation and Monopoly Leveraging" . DYNAMIC COMPETITION AND PUBLIC POLICY: TECHNOLOGY, INNOVATION, AND ANTITRUST ISSUES, J. Ellig, ed., Cambridge University Press, 2000

Abstract:

    This paper, written when Fisher was preparing for his testimony in Microsoft, discusses the circumstances in which monopoly "leveraging" makes sense as an anti-competitive act. Three cases are discussed and contrasted: The IBM case of the 1970's; the Computer Reservation System Cases of the 1980's; and the Microsoft case. Fisher was a principal economic witness in all of them, for the defense in IBM and for plaintiffs in the other two cases.
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Facts on IBM Software

IBM WebSphere Application Server works with a number of Web servers including Apache, Netscape Enterprise and Microsoft Internet Information Services (IIS) as well as IBM HTTP Server for AS/400, IBM HTTP Server for OS/390 and IBM HTTP Server for AIX, Windows NT, Solaris.

Lotus, which employs over 4,000 employees worldwide, was acquired by IBM in July 1995 for 3.5 billion dollars. IBM's purchase was greeted with apprehension by many Lotus employees, who feared that the corporate culture of "Big Blue" would smother their creativity. To the surprise of many employees and journalists, IBM adopted a very hands-off, laissez-faire attitude towards its new acquisition.

Rational provides a software development platform that can improve the speed, quality and predictability of software projects. Ninety-eight of the Fortune 100, including IBM, use Rational tools and services. IDC estimates the market opportunity for application development software will grow from $9 billion in 2002 to $15 billion in 2006.

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