Rethinking Software Tying

Abstract

This Note proposes a new method of product definition in software tying cases. "Tying" is a refusal to sell one product unless the buyer also purchases another product and is a method by which firms are thought to be able to use their power over one product to obtain power over another. Tying is the principal antitrust allegation-brought against Microsoft, which refuses to sell its operating system (Windows) unless the buyer also receives a copy of its web browser (Internet Explorer). Yet Microsoft claims that it has integrated Internet Explorer into Windows, creating a single integrated product. But in order to have tying, two separate products must exist. This dilemma has been dubbed the "single-product problem " and has required courts to define products before conducting further analysis. This Note explains why traditional methods of product definition cannot be applied to the software industry. The software industry not only requires a new method of defining products, however; it also, by its very nature, transforms the role of the court in software tying cases. After outlining a theory of software evolution, this Note presents a new method of evaluating integrated software and applies it to three recent examples, including the current case against Microsoft. The new test reveals that the combination of Internet Explorer and Windows should not be considered a single integrated product, because the bundling harms consumer welfare.