Title: The Visible Hand of Law: Microsoft, Standard Oil, and the Causal Maps of Judicial Decision
1The Visible Hand of Law Microsoft, Standard Oil,
and the Causal Maps of Judicial Decision
- V.K. Narayanan
- Mari Buche
- Clyde Stoltenberg
2Outline
- Motivation and Background
- Introduction to Causal Mapping Methodology
- Discussion of Legal Background
- Summarize Microsoft Antitrust Case
- Summarize Standard Oil Case
- Discuss Complexities Encountered
- Explain Enhancement to Methodology
- Conclusion
3Motivation
- Press releases covering MS Case
- Summer Grant for 2000
- Interesting to compare antitrust cases
- Desire to learn the RCM methodology with
practical experience - Outcome determinative case comparison
- Recent developments in MS Antitrust Case
4Background
- Judge Thomas Penfield Jackson released findings
of fact in November 1999 - Speculation about breakup of Microsoft
- Historical examples of dissolved mega-companies
- Impact on consumers
5Introduction to Causal Mapping Methodology
- Tolman (1948)
- Axelrod (1976)
- Narayanan Fahey (1990)
- Nelson, Nadkarni, Narayanan, Ghods (2000)
6Revealed Causal Mapping
- Select data source (text, interviews, etc.)
- Independently identify causal statements
- because, so, ifthen, etc.
- Compare and discuss statements
- Calculate inter-rater reliability
- Extract specific concepts from the statements
- Develop coding scheme
- Aggregate concepts into constructs based on
theoretical basis (recast raw maps into revealed
causal maps) - Perform member checks to validate RCMs
7Legal Background
Findings
Holding
Liability or Ruling
Precedent
8Sherman Antitrust Act
- Section 1 prohibits every contract,
combination, or conspiracy, in restraint of
trade or commerce. - Includes Tying Arrangements and Exclusive
Dealings Agreements - Monopoly power
- Exercise or abuse of power
- Harm or damage
9Sherman Act
- Section 2 declares that it is unlawful for a
person or firm to monopolizeany part of the
trade or commerce among the several States, or
with foreign nations - Broader interpretation of monopoly power
- Includes attempts to acquire or maintain monopoly
power - Anti-competitive acts, in general
10Legal Definitions
- Must define each of the following
- Product(s) in question
- Market affected
- Tying/Tied Products
- Jefferson Parish Hospital (1984)
11Flow of Critical Legal Tests
- Define the market
- Existence of Monopoly Power
- Control price
- Exclude competition
- Demonstration of Monopoly Power
- Are they acting on their monopoly power?
- Business or Technical reasons to justify or
support monopoly power - Criterion for predatory conduct
12Comparison of Sources
- Standard Oil Case
- Date 1910
- Length 106 pages
- Causal Statements 178
- Concepts 245
- Constructs 74
- Microsoft Case
- Date 2000
- Length 21 pages
- Causal Statements 195
- Concepts 328
- Constructs 126
13Summarize Microsoft Antitrust Case
- Threats
- Browser Market
- OEM Channel (Original Equipment Manufacturer)
- IAP Channel (Internet Access Provider)
- ICPs, ISVs, and Apple (Internet Content
Providers, Independent Software Vendors) - Operating Systems Market
14Summarize Standard Oil Antitrust Case
- This conspiracy was a continuing offense.
- Agreement
- Fixing price of crude and refined oil
- Controlling production
- Limiting distribution restraining trade and
commerce - Standard Oil Company of Ohio - Trust
15Complexities Encountered
- Simple comparison of judges rulings
- Maps of rulings would overlap in generalities,
but differ in specifics depending on the industry - Expected different perspectives on Antitrust, due
to historical events
16Simple Causal Statement Example
- Our present topic is the militarism of Germany,
which is maintaining a state of tension in the
Baltic Area. (Axelrod, 1976) - CAUSE LINKAGE EFFECT
- The militarism maintaining a of Germany
state of tension in the Baltic area
17Definitional Complexities
- Not clearly causal (according to Axelrod, 1976)
- Must consider the beliefs of the actors
18Example of Definitional Causal Statement
- Whether this zone of commercial activity
actually qualifies as a market, monopolization
of which may be illegal, depends on whether it
includes all products reasonably interchangeable
by consumers for the same purposes. (MS Case,
2000)
19Mapping the Definitional Statement
- CAUSE LINKAGE EFFECT
- if the zone the zone of
- includes reasonably commercial
- interchangeable activity qualifies
- Products as a market
- Type ifthen statement (built on a belief)
20Complexities of Industries
- Could apply traditional strategy framework
(Michael Porters Value Chain) reasonably well to
the Standard Oil Case - Moving to Microsoft Case required a mental shift
- Couldnt simply overlay dictionary from Standard
Oil - The two industries are substantially different in
structure and complexity of entities involved
21Software Industry Environment
INTEL
OEM
Competitor Navigator
OP SYS
Bargaining Power Customers
Software
Complimentary Product JAVA
SAP
IAP
22Complexities of Lenses
- Strategy
- Economic environment
- Regulatory environment
- Value Chain
- Legal
- Judicial hierarchies
- Binding precedent
- Findings of Fact and Holdings
- Definitions of Markets, Products, Monopoly Power
- Mirroring occurs between the legal and the
strategy views
23Complexity of Perspectives
- Must consider maps for all participants
- Judge
- Bound by precedent
- Plaintiff(s)
- Wants narrow interpretation of product/market
- Defendant
- Strives for broad interpretation of
product/market - English Common Law
- Standard for legal system in the United States
24Isomorphic Complexities
- Approach
- Per Se
- Letter of the Law
- Rule of Reason
- Economic Justification
- Common Sense
- Judicial Judgment
254-Dimensional Analysis
Legal
Hierarchy
Def
Strategy
Sec 1
Sec 2
State Laws
Perspective
26Enhancements to RCM
- Definitional
- Labeling and defining relevant terms
- Beliefs
- Causal statements based on belief of the speaker
- Mirroring
- Legal and Strategic Analysis
27Conclusion
- Comparing RCMs of judges rulings
- Standard Oil Case
- More discussion of harm to consumers
- Formal language of source document
- More use of English Common Law for basis
- Microsoft Case
- More use of precedent
- More discussion of harm to competition
- Readable broader audience
28Conclusion (Continued)
- Methodology paper to cover enhancements
- Academy of Management
- Strategic insights into antitrust events
- Legal insights into judicial decisions
- Information Systems issues of industry complexity
and prediction of results due to outcome
determinative rulings