Greg Sivinski discusses important changes in the technology industry over the past 10 years from his perspective at Microsoft. He notes the shift from standalone PCs to competing ecosystems centered around devices, apps, services and access to user data at scale. This has implications for antitrust authorities. Three key issues are balancing IP rights and abuse, privacy/data protection with advertising roles, and the impact of large companies' control over user data, which is a critical input and barrier to entry in many markets. While tools exist to address new conduct, authorities have not fully grasped changes like the effect of Google's search/ad monopolies. Privacy and data are emerging antitrust issues as data affects many technologies and its control can blunt competition.
Antitrust Abide Information Technology? Microsoft Counsel Discusses Changes
1. ConcurrencesRevue des droits de la concurrence
Competition Law Journal
Greg SIVINSKI: Does antitrust
abide in information
technology?
Interview l Concurrences N°4-2013
www.concurrences.com
Greg SIVINSKI
greg.sivinski@microsoft.com
l Assistant General Counsel, Antitrust Group,
Microsoft Corporation, Washington
2. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?1
@ Interview
Greg SIVINSKI: Does antitrust
abide in information
technology?
You joined Microsoft’s in-house antitrust team back in 2003.The technology
industry has changed dramatically in the ten years since then. From your
perspective, what have been the most important changes and what lessons should
antitrust practitioners draw from those changes?
I only need to look at the desk in my office to answer that question. Ten years ago,
I had a company-issued PC on the floor and it was networked to a central server
in the basement of my building. I had a telephone running through a central PBX
(i.e., Private Branch Exchange) an external back-up hard drive for my documents,
a printer, and a cell phone that only made calls and sent texts. Today, I have none
of these. My computer is a laptop convertible to a tablet with touch screen and
a smart pen. Many of the Office applications that used to run on my computer,
or on the server in the basement, are now delivered as a service over the internet
from the Azure cloud. I no longer have a phone in my office – all of my telephony
is over the web via Lync or Skype from my laptop using a wireless headset. All of
my documents are stored in the cloud on SkyDrive, accessible from my choice of
devices, and I take them with me to meetings on a Surface tablet running One Note.
My Windows Phone has full web and local search, GPS mapping, access to all of
my documents, full applications capability (and of course it can still send a text).
All of my devices have an operating system (“OS”) with a common Windows user
interface. All of my applications and data are accessible from any of these devices,
anywhere, at any time. All of which highlights a number of critical changes in the
technology industry over the past ten years.
First, competition has moved beyond the x-86 PC to a paradigm of competing
ecosystems, starting with Apple’s ecosystem around iOS, the Apple devices that run
it, its associated apps, and the App Store. Today, all the categories of hardware,
software, and services that I use in the Microsoft ecosystem are available to a high
degree in competing alternatives from established non-Windows ecosystems from
Apple and Google, and on the horizon from Amazon and Samsung.
In turn, the emergence of these ecosystems is driving the consumerization of IT.
By that I mean that today we all want to use our personal devices at work and
at play. As a result, we want to be able to use the same interface and access the
same functionalities/services/apps on our personal smartphone and our business
tablet/laptop. In turn, Ecosystems and consumerization of IT are driving device
convergence. For example, I no longer take a laptop to meetings and often leave
it at home when I travel. I take a tablet computer instead, or increasingly, just
my smartphone (which may be all I need at times given the increasing size and
functionality of so-called “phablets”).
Second, the incredible growth in cloud-based technology enabled by broadband
speeds has revolutionized how people connect to technology. Enterprise applications,
and even my productivity applications such as Office, run in the cloud as a service,
not locally using individually licensed code installed on a server down the hall or
on my computer. Most data storage and data center functions are—or will soon
be—hosted in the cloud.
Third, acquiring and then mining “big data” to fuel machine learning that underpins
internet search, online advertising, and virtually all other online services has emerged
as a critical input to competition (and significant barrier to entry) in every area of
Greg SIVINSKI
greg.sivinski@microsoft.com
Assistant General Counsel, Antitrust Group,
Microsoft Corporation, Washington
2003 to present
Assistant General Counsel,
Antitrust Group, Microsoft
Corporation
1993-2003
Senior Attorney, American
Airlines
1986-1993
Attorney, Winstead PC
*Interview conducted by Jay Jurata, Partner, Orrick,
Herrington & Sutcliffe LLP, Washington, DC.
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(art. L. 335-2CPI).L’utilisationpersonnelleeststrictementautoriséedansleslimitesdel’articleL.1225CPIetdesmesurestechniquesdeprotectionpouvantaccompagnercedocument.Thisdocumentisprotectedbycopyrightlawsandinternationalcopyrighttreaties.Non-authoriseduseofthisdocument
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3. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?2
online endeavor. Access to user data at scale is probably
the most important, and least understood or appreciated,
aspect of competition in tech today. This is because online
markets such as search, search advertising, and other online
services are multi-sided (e.g., search advertisers pay while end
search users play for free). These markets are characterized
by strong network and dynamic scale effects, which result in
high barriers to entry. For example, in the case of search,
more users means more advertisers, which drives higher
revenue. In turn, this allows greater revenue sharing with
publishing partners at levels a smaller search engine cannot
match based on the economics. User scale and associated
data also accelerates the pace of innovation and results in
a relative scale gap in terms of machine learning among the
various search engines. In short, in these markets, data is
“king” and your ability to compete is not just a function of
how much data you have at a given time, it is a function of
how much data you have relative to your competition over
time that drives success.
Access to user data at scale is
probably the most important,
and least understood or
appreciated, aspect of competition
in tech today.
So we have learned over the last ten years that competition
and markets are not static. PC OSs may have one day been
a distinct relevant market, but today the operating system
is just one component of a multi-device ecosystem of apps
and services founded in access to users and data at scale. Yet,
despite this dramatic change and dynamic markets, I am in
the camp that believes that antitrust already has the tools
to address new-generation anticompetitive conduct. Often,
what is lacking is a full appreciation of the extent to which
the game has changed, that what once was considered crucial
to competition is now often secondary at best. Looking just
around the corner, how big data is acquired, controlled, and
ultimately used is the next “big thing” in antitrust.
Your responsibilities at Microsoft include both government
merger and conduct investigations, with an increasing
emphasis in recent years on intellectual property issues.
From your viewpoint, what are the three most important
issues facing competition authorities around the world?
Certainly, you have alluded to one of the three: striking the
right balance between encouraging competition through IP
rights—which is good for consumers—and pursuing abusers
of the system. Many authorities, and more recently the courts,
are rightly focused on this dynamic as it relates to abuse of
standard-essential patents (“SEPs”), which are patents that
are necessarily infringed by unlicensed implementation of
widely adopted formal technical standards such as WiFi.
SEPs have market power stemming from the collaborative
nature of standards-setting among industry players, and the
fact that SEPs generally cannot be worked around. Effective
and enforceable commitments to license these SEPs on fair,
reasonable and non-discriminatory (“FRAND”) terms and
conditions are necessary to keep SEP holders from leveraging
their SEPs to “hold up” implementers of the standard for
non-FRAND royalties.
Privacy and data protection is another critical issue for
authorities. There is a balance with respect to offering
consumers more control over privacy, and recognizing that
advertising and advertisers have legitimate and strong roles
to play. Privacy is an issue reaching a tipping point, while at
the same time privacy policies among the major players are
increasingly divergent. At Microsoft, we share consumers’
privacy concerns, and we are making concrete efforts to help
give them more control, today and in the future. Last year,
we built “Do Not Track” technology as the default option
for our browser software, Internet Explorer 10. We decided
to do this after consumers overwhelmingly told us that they
want more control over how their personal information is
used online. More recently, we launched Bing for Schools,
which enables students to conduct searches in school without
the distractions that result from advertising.
And, as I mentioned earlier, it is hard to overstate the
importance of data (much of it gleaned from consumers
who may be not entirely aware of the data being collected) in
the ecosystem environment. And as you might suspect, I do
not think that competition authorities have fully grasped the
impact of Google’s search and advertising monopolies on
competition in a variety of technology markets. All of these
issues are interrelated to some extent.
Speaking of search and advertising, you were actively
involved in the U.S. Federal Trade Commission’s antitrust
investigation of Google’s search advertising practices,
which closed in January of this year after Google made
some voluntary commitments concerning its future conduct.
Microsoft management described the FTC settlement
in a blog post as “weak” and “unusual.”The European
Commission appears to be nearing a settlement in
its Google search advertising investigation and other
jurisdictions continue to investigate the company’s search
practices. What are the most important things that you
disagree with regarding the FTC’s decision, and why?
What may other antitrust agencies take into account in their
respective search investigations?
Yes, the search settlement with Google was disappointing
on a number of levels, starting with the fact that Google’s
undertakings are voluntary and thus, unenforceable against
Google absent a consent decree. It is clear that competition
authorities—despite a lot of hard work by the talented,
dedicated people in those agencies—are still grappling
with the extent and impact of Google’s search and search
advertising monopolies on competition in a number of
markets.
Most recently, for example, we have seen Google’s affirmative
steps to block high-quality YouTube apps for smartphone
platforms that do not use Google’s dominant search engine
as a default, such as Windows Phone. By having two
different interfaces—a high-quality one made available for
phone platforms that use Google search as their default
search engine, such as the iPhone, and a low-quality one for
Cedocumentestprotégéautitredudroitd'auteurparlesconventionsinternationalesenvigueuretleCodedelapropriétéintellectuelledu1erjuillet1992.Touteutilisationnonautoriséeconstitueunecontrefaçon,délitpénalementsanctionnéjusqu'à3ansd'emprisonnementet300000€d'amende
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4. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?3
phones that do not—Google degrades the YouTube viewing
experience for customers that do not buy phones that default
to Google search.
Looking just around the corner,
how big data is acquired,
controlled, and ultimately used is
the next “big thing” in antitrust.
On the positive side, the European Commission has
identified a number of serious concerns in its investigation.
First, in its general search results, Google gives preferential
treatment to its own vertical search services over competitors’
links. Second, Google copies content from competing
vertical search services and uses it in its own offerings, which
reduces competitors’ incentives to invest in the creation of
original content for the benefit of internet users. Third,
agreements with web advertisers result in de facto exclusivity
requiring them to obtain all or most of their requirements
of search advertisements from Google. Fourth, Google
contractual restrictions on software developers prevent
them from offering tools that allow the seamless transfer of
search advertising campaigns across Google’s ad platform
(AdWords) and other platforms for search advertising.
After a recent market test, the Commission found Google’s
proposed undertakings to resolve these concerns to be
insufficient. We are waiting to see what happens next. In the
meantime, I am hopeful that a number of other agencies
around the world who are also investigating will look even
more broadly at Google’s conduct—to see the forest as well
as the trees, so to speak. Google possesses a very powerful
monopoly and has used it to blunt actual and potential
competition in a variety of markets, and that is a problem
for competition and is inhibiting innovation. I suspect that
is what the European Commission heard a lot about this
summer when it was market testing Google’s proposed
remedies to settle that investigation.
Some critics of the FTC’s decision in the Google search
advertising investigation say that there should have been
more of a focus on privacy and Google’s control over user
data. Do you believe that privacy and “big data” are antitrust
issues and, if so, why? What unique challenges do such
issues present for antitrust practitioners?
Yes, I think these are antitrust issues. The fact is that access
to data affects a wide range of other technologies. The most
well-known examples are web search and search advertising.
But a host of applications and websites now rely on user
data, whether it is actively placed in the cloud by the user
(e.g., when creating saved account information), collected
in the course of online activity, scanned by sending email
to certain email platforms, or generated as the result of the
user carrying a phone running a particular OS as they are
moving around. Many companies use that data in return for
providing services, making the user’s data akin to the “price”
being charged for those services. And no one would challenge
the role of price in assessing consumer harm.
Increasingly, we are seeing traditional foreclosure practices
by vertically-integrated companies such as Google, collecting
big data and using it in downstream markets in competition
with customers of its online advertising services. However,
there is a major difference in that the data input in these
cases —including data documenting our every interaction
with a website such as clicks, time of engagement, even where
a person may hover its cursor over a link—has not been
produced by the website but belongs to consumers who have
unknowingly relinquished control over it. I can easily foresee
a time in the not too distant future where, subject to privacy
law requirements, all market players whose competitive
offerings depend on access to users’ data and who comply
with privacy law requirements should have access to such big
data on the ground that it is a public good, access to which
will preserve competition in online services.
We also make a tremendous effort to be good stewards of
users’ information and, not to violate the trust those users
place in us, have built very strong privacy protections into
our policies and products. I think that is true for most
technology companies with some notable exceptions. User
data is important for many technology companies as they
compete with one another, and the privacy protections on
that data can be an important differentiating feature or a
service or term of supply that should factor into antitrust
analysis of competitive dynamics.
And, of course, if one company gains control over user
data at a certain chokepoint—as Google has with its
search monopoly—it can wield that data to blunt potential
competition in downstream or adjacent markets. In a
world of ecosystems, that kind of control can be incredibly
powerful.
One area in which Microsoft and the US and EU antitrust
authorities do appear to share common ground has been
the focus on addressing alleged abuses of standard-
essential patents, or SEPs. Why do you believe this is an
important competition law issue? And what do you see as the
major problems that remain unresolved concerning SEPs?
I am not surprised that the US and EU authorities have found
common ground over SEPs. As you know, SEPs are patents
that are necessarily infringed by unlicensed implementation
of a widely deployed standard adopted by a standard-setting
organization, or SSO. The IEEE 802.11x series of Wi-Fi
standards is an example; the standard contains a number of
patented technologies contributed by different owners. When
someone contributes patented technology to a standard,
they typically voluntarily agree to license those patents on
a fair, reasonable, and non-discriminatory, or FRAND,
basis. Such a commitment prevents them from getting their
patented technology into a standard that everyone needs
for their products, and then turning around and using that
patent to exclude rivals from the marketplace or to extract
non-FRAND royalties and other licensing terms from
implementers of the standard, often called “patent hold up.”
But what has happened is that certain SEP owners have
found ways to nonetheless engage in patent hold up. For
example, they have brought infringement claims on SEPs
Cedocumentestprotégéautitredudroitd'auteurparlesconventionsinternationalesenvigueuretleCodedelapropriétéintellectuelledu1erjuillet1992.Touteutilisationnonautoriséeconstitueunecontrefaçon,délitpénalementsanctionnéjusqu'à3ansd'emprisonnementet300000€d'amende
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5. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?4
before the U.S. International Trade Commission (“ITC”) to
seek exclusion orders barring importation into the U.S. of
products that implement these standards, such as Xbox, or
they have breached their FRAND promise by demanding
non-FRAND licensing terms for their SEPs and seeking
injunctions on those SEPs in court to unfairly pressure the
implementer to accede to their demands. Facing the risk of
exclusion from the marketplace, implementers can be forced
to take non-FRAND terms, which can have anti-competitive
effects in the market and a negative impact on the consumers
of interoperable products and services.
Fortunately, we are seeing some pretty strong reactions to
these tactics by courts and authorities. These include the
FTC’s settlement with Google where Google agreed (at least,
in theory) not to seek injunctions or exclusion orders on SEPs
it acquired from Motorola, as well as the FTC’s settlement
with Bosch that included similar restrictions on the use of
FRAND-encumbered SEPs. Most recently, the Obama
Administration vetoed an exclusion order against Apple
barring importation of certain iPhone models by the ITC,
somethingthathasnotbeendonesincethe1980s,andinstructed
the ITC to take the public interest into account when dealing
with exclusion requests based on FRAND-encumbered
SEPs. In the meantime, the European Commission issued
a Statement of Objections against Samsung based on a
complaint by Apple that alleged improper use of SEPs.
We also have seen a number of related court decisions in
the U.S. In 2012, Judge Posner denied Motorola Mobility’s
claim for an injunction against Apple on its standard-
essential patent because a FRAND royalty would provide all
the relief to which Motorola would be entitled if it proved
infringement of its SEPs. And in another case, Realtek, a
United States district court in San Diego recently enjoined
a SEP holder from pursuing an ITC exclusion order on its
SEPs. And finally, Microsoft recently concluded a jury trial in
federal district court in Seattle on its claims that Motorola’s
conduct in seeking injunctions, even when judged alone apart
from its general course of conduct, violated Motorola’s duty
of good faith and fair dealing and thus breached its FRAND
licensing commitments. On September 4, a unanimous jury
rendered its verdict in favor of Microsoft on all claims and
awarded damages to Microsoft in the amount of $14.5 million.
But there are unresolved issues. One is what exactly
constitutes a FRAND offer and how does a court figure that
out—I would point readers to Judge Robart’s very detailed
April 25 opinion in the Microsoft v. Motorola case, which
was the first time a U.S. court stepped in to determine the
FRAND value for a SEP, and likely will be a roadmap for
other courts.1
Specifically, Motorola’s demand for 2.25% of
the end product selling price for its SEPs was not FRAND,
and that the FRAND royalty was rather a set per-unit
amount—$0.005 for each H.264-compliant Windows or
Xbox product and $0.0347 for each 802.11-compliant Xbox
product. For example, the 2.25% royalty that Motorola
demanded would have been $11.25 for a $500 Dell laptop,
but the actual FRAND royalty was just $0.005.
1 Microsoft Corp.v.Motorola,Inc., 2013WL 2111217 (W.D.Wash.Apr. 25, 2013).
Another issue that the agencies in particular are grappling
with is so-called patent “hold out,” which some claim can
occur when a potential licensee refuses to accept a FRAND
offer for a license to SEPs. “Hold out” (a refusal to take a
FRAND license for SEPs) should be less of a concern,
however, when one considers that the SEP holder can take
any dispute between the parties to court and seek monetary
relief that, if awarded, can be enforced by the court. Most
importantly, patent hold out does not raise an antitrust
concern, while patent hold up using SEPs most certainly
does.
[M]uch of the current litigation
in the so called “smartphone
patent wars” could have been be
avoided if companies were willing
to recognize the value of others’
creations in a way that is fair.
Intellectual property rights are a
two-way street.
Clearly, patents are becoming an ever-increasing focus of
your practice. In addition to disputes involving SEPs, you
recently have been involved in high profile transactions
involving patents sold by Novell, Nortel, and Kodak. In light
of what we have been discussing, why are patents of such
interest to Microsoft and other technology companies right
now?
Well, as I mentioned earlier, I think intellectual property
has been developing as a competitive issue in recent years.
From Microsoft’s perspective, the most basic consideration
is the amount of investment we put into R&D compared to
companies in other industries and indeed, compared to most
of our competitors. Microsoft spent $10.4 billion on R&D in
fiscal year 2013. Whether we incorporate all of that research
into our products or not, we have a right to recoup that
investment if someone else wants to use the technology that
we have developed through that R&D. On the other hand,
much of the current litigation in the so called “smartphone
patent wars” could have been be avoided if companies were
willing to recognize the value of others’ creations in a way
that is fair. Intellectual property rights are a two-way street.
This is why we have paid others more than $4 billion over the
last decade to license others’ IP and implement it in our own
products. As a general matter, we just place a high value on
IP, for use in our products or our partners’ products, or in
its own right as the end result of somebody’s investment of
resources and creativity.
Ithinkyoucanrelatesomeof themorerecentIPdevelopments
to some of the same trends we discussed earlier. For example,
with the evolution of ecosystems, we have to worry about
more than just software IP, but also hardware. That has
been amplified by the variety of patents that read on cloud-
related technology, and especially the number of standards
at play. We want to be able to develop products in these areas
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6. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?5
ourselves and we want our partners to be able to do the same.
When we negotiate licenses or when we negotiate broader
cross-licenses or other agreements, patents are valuable
consideration. It is pretty clear that our competitors feel the
same way.
Finally, you do have infringement concerns that drive interest
in patents. I think the open source movement has contributed
a great deal to the software industry and many open source
developers try very hard to avoid infringing others’ patents.
But there are some operating systems out there, such as
Android, which look and function very, very similarly to
proprietary OSs that took many years of investment and
development. I think a number of proprietary software
developers have been concerned for some time that Android
is free riding on their investments, a practice which distorts
competition between mobile platforms.
Another major issue, which has drawn the attention of
President Obama, is the patent litigation initiated by “Patent
Assertion Entities” (“PAEs”), which in the President’s words
“don’t actually produce anything themselves” and instead
develop a business model “to essentially leverage and
hijack somebody else’s idea and see if they can extort some
money out of them.” Based on public reports, by the time
this interview is published the Federal Trade Commission
likely will be conducting a market study of PAEs (under
its Section 6(b) of the FTC Act authority) and their impact
on competition. What do you hope the FTC focuses on in
conducting this market study, and why?
I trust that the FTC focuses on the truly bad actors and not
ignore the pro-competitive aspects of secondary IP markets
generally. Like many large technology companies, we have
been on the receiving end of infringement lawsuits that are, as
the president suggested, little more than “extortion.” I would
similarly categorize the nuisance-value suits, where PAEs
seek minimal amounts but from many, many defendants,
hoping the value of settling minor suits is such that they can
collect a payday in the aggregate. The president and the FTC
are absolutely right to look at these kinds of abuses.
However, they should seriously consider the extent to which it
makes sense to focus enforcement efforts and scarce resources
on all entities that are getting rich by exploiting imperfections
in the patent system and the courts, i.e., economically efficient
actors, rather than focus their attention on improving the system
such that it is less conducive to enabling such actors to thrive.
If you accept that patents have an
inherent value as the embodiment
of someone’s investment of time,
effort, and thought, then it makes
sense to have a [secondary] market
for those—to compensate the
inventors and also to encourage
other inventors to invest their time
and effort in new technology.
This is particularly important for secondary IP markets
that serve a healthy competitive purpose. Sometimes,
inventors do not have the resources themselves to monetize
their patents, which may be quite valuable and represent
important innovations. If you accept that patents have an
inherent value as the embodiment of someone’s investment
of time, effort, and thought, then it makes sense to have a
market for those—to compensate the inventors and also to
encourage other inventors to invest their time and effort in
new technology.
Rather than close down the secondary market for patents,
the president and the FTC could begin by taking a few
concrete steps to ameliorate conditions contributing to the
worst abuses. Greater transparency, e.g., a requirement that
patent holders disclose all of the patents that they own, and
a loser pays regime in patent litigation are just two examples.
Some have suggested that “hybrid PAE activity,” or so-called
“patent privateering,” is particularly problematic from an
antitrust perspective due to the potential for “raising rivals’
costs.” Do you share that view? Why or why not?
Well, I think it depends on the activity. As with PAE activity,
generally, you want to look out for abuse of the system
without destroying the system altogether. A company may
spend a tremendous amount on a particular technology, then
find that it may not be useful to implement it in its products.
It may make sense for that company to assign its patents to
another entity that can monetize the patents and help recoup
the investment in their development. So you want to enable
that kind of activity and all the related benefits from it—
better valuation of assets and more deal-making, increased
innovation, and more vigorous competition.
We also need to be careful in lumping any input cost into
the “raising rivals’ costs” bucket. Whether you agree with the
theory as a basis for antitrust liability or not, all inputs raise
cost. That is why the academic work in this area has always
spoken in terms of artificially raising rivals costs. In the
patent space, we have to ask, can a patent license artificially
raise rivals’ costs, or is the licensee just paying what the
market determines is the correct price for a given input that
is being used by that company?
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(art. L. 335-2CPI).L’utilisationpersonnelleeststrictementautoriséedansleslimitesdel’articleL.1225CPIetdesmesurestechniquesdeprotectionpouvantaccompagnercedocument.Thisdocumentisprotectedbycopyrightlawsandinternationalcopyrighttreaties.Non-authoriseduseofthisdocument
constitutesaviolationofthepublisher'srightsandmaybepunishedbyupto3yearsimprisonmentanduptoa€300000fine(Art.L.335-2CodedelaPropriétéIntellectuelle).PersonaluseofthisdocumentisauthorisedwithinthelimitsofArt.L122-5CodedelaPropriétéIntellectuelleandDRMprotection.
7. Concurrences N°4-2013 I Interview Greg SIVINSKI: Does antitrust abide in Information technology?6
I do think it is possible for such activity to cross the line
and raise antitrust concerns, though I would analyze it as
I would any antitrust issue. In other words, you need to
define a relative market, assess if there is market power,
define what is the specific exclusionary act or acts, evaluate
business justifications, look at standing and antitrust injury,
etc. History has shown us that many business practices that
were condemned due to lack of understanding, like most of
the infamous 9 licensing “no-nos” from the 1970s, are widely
recognized as procompetitive today.
Some of the more recent mergers and proposed
transactions in which you have played a role include
Microsoft’s acquisition of Skype (2011) and Google’s
proposed search partnership with Yahoo (2008). What was
the most interesting transaction that you were involved in,
and why?
That is a hard question, I have been very fortunate over
the years to have been involved in a number of really
interesting and challenging situations. The search and
search advertising markets in general have been a focus of
mine given the increase in mergers since 2006, when Google
acquired DoubleClick, with a lot of very important issues
on the table. If I had to pick one example, I would pick our
transaction with Yahoo!. As you know, the Department of
Justice (“DOJ”) moved to block the failed Google/Yahoo!
search deal in 2008, and our search deal with Yahoo! was
approved shortly thereafter. Not only did these deals involve
markets that were relatively new to the antitrust authorities
at that time, but having two 3-2 deals in the same markets
before the agencies in close proximity to one another, and
then successfully making the case that our deal with Yahoo!
was procompetitive and should be cleared was particularly
satisfying. We also had to overcome a natural skepticism of
many in the government and in the media to view Microsoft
as an underdog in any space.
Prior to joining Microsoft, you spent 10 years working
on antitrust matters as part of the in-house legal team
at American Airlines. How have your experiences in the
technology industry differed from your experiences in the
airline industry? In which ways are they similar?
Of course, the airline industry is a more mature industry
with a history of heavy regulation, while many technology
businesses are relatively young and grew up with much less
regulation. But in many ways, the airline industry is similar
to some technology businesses. In scale businesses, larger
networks are often able to provide higher quality offerings
to consumers. And, over the years, the nature of these scale
businesses has given rise to somewhat similar scrutiny from
antitrust authorities.
Speaking of airlines and of larger networks, what is your
view of the consolidation that has occurred in this industry
during the last decade? How has that consolidation
benefitted or harmed consumers? And do you wish to share
any views on the recently proposed merger between your
former employer, American Airlines and US Airways?
The turmoil in the airline industry is well-documented.
Margins are extremely thin and disruptive bankruptcies have
become commonplace. Low-cost carriers have proliferated
and fares have stayed relatively low. Indeed, I believe if you
look at airfares over the last 10 years, you will see that in real
terms that fares have dropped. Against this background and
given the relatively few overlaps involved, I think the DOJ
probably got it right in clearing airline mergers in recent years,
includingDelta/Northwest,UnitedAirlines/Continental,and
Southwest/Airtran. I also think the American/US Airways
deal is a deal that should probably be allowed to proceed.
There are similarly few overlaps. American is in bankruptcy
and this deal would allow it to emerge with a much-improved
network better able to compete with its larger rivals. From the
outside, I am not sure DOJ has adequately explained what
makes this deal different from ones the same administration
recently cleared.
Cedocumentestprotégéautitredudroitd'auteurparlesconventionsinternationalesenvigueuretleCodedelapropriétéintellectuelledu1erjuillet1992.Touteutilisationnonautoriséeconstitueunecontrefaçon,délitpénalementsanctionnéjusqu'à3ansd'emprisonnementet300000€d'amende
(art. L. 335-2CPI).L’utilisationpersonnelleeststrictementautoriséedansleslimitesdel’articleL.1225CPIetdesmesurestechniquesdeprotectionpouvantaccompagnercedocument.Thisdocumentisprotectedbycopyrightlawsandinternationalcopyrighttreaties.Non-authoriseduseofthisdocument
constitutesaviolationofthepublisher'srightsandmaybepunishedbyupto3yearsimprisonmentanduptoa€300000fine(Art.L.335-2CodedelaPropriétéIntellectuelle).PersonaluseofthisdocumentisauthorisedwithinthelimitsofArt.L122-5CodedelaPropriétéIntellectuelleandDRMprotection.
8. Concurrences
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