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Explore the question of whether Microsoft's judgment bundling of Windows Media Player is a constraint on innovation, and the potential benefits and drawbacks of integration. Analyze market shares of media players and the use of multiple media players.
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BIICL conference: The Microsoft JudgmentBundling Dr Helen Jenkins, Managing Director September 25th 2007
How many products? • WMP is well-integrated into the operating system, but is separate in a number of ways • stand-alone competitor products exist • Commission and Court conclude that there are two products and that they are tied Is this a constraint on innovation? • are there benefits from integration that will be reduced?
Two-sided markets and consumer welfare What is normal competition? What enhances welfare? Commission’s view Alternative view Downloading is a barrier OEMs do not want to load multiple media players Content providers do not want to multi-format Single media player is more efficient? OEMs often happy to pre-load more and/or downloading is easy Costs more to multi-format, but critical mass of users is small Can sustain multiple media players, even if WMP is ubiquitous How should it be chosen? Relevant to consider if there is a foreclosing effect
Market shares of media players(unique users) (%) Source: European Commission decision of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty. (Case COMP/C-3/37.792 Microsoft), data for years 1998–2002; WebSiteOptimization (2007), ‘Apple's iTunes Player Climbs Streaming Media Charts’, March, data for years 2003–07; and Oxera analysis.
Use of multiple media players • according to Microsoft Fact Sheet (2006), significant increase in the number of media players pre-installed (in addition to WMP) • EU increased from 1.4 per user in 2004 to 3.2 in 2006 • USA increased from 3.2 per user in 2004 to 3.7 in 2006 • average number of media players per user increased from 2.1 in 2004 to 2.6 in 2006
Streaming media player time per person (minutes) Source: WebSiteOptimization (2007), ‘Apple's iTunes Player Climbs Streaming Media Charts’, March, and Oxera analysis.
www.oxera.com Contact: Dr Helen Jenkins +44 (0) 1865 253 035 helen.jenkins@oxera.com