Anti-competitiveness of Instant Messenger Tying by Microsoft

Jaehong Kim, Se Hoon Bang and Sunjoo Hwang

Hitotsubashi Journal of Economics, 2011, vol. 52, issue 2, 185-198

Abstract: In this paper, we theoretically analyze Microsoft's tying practice in the instant messenger market. Using a model that highlights distinct features of the instant messenger, which are different from the cases of the web browser and the media player, we show that Microsoft can leverage its monopoly power in the operating system (OS) market to the instant messenger market through tying strategy. Microsoft's messenger tying hurts consumers because it enables Microsoft to monopolize messenger market and so fully exploit consumer's willingness to pay to the OS-messenger bundle. However, since tying saves installing costs, consumer loss is not so serious that total surplus improves under messenger tying. Finally we show that such results are robust to the possibilities of multi-homing in the instant messenger market.

Keywords: Microsoft; instant messenger; tying; foreclosure; multi-homing (search for similar items in EconPapers)
JEL-codes: L12 L41 L86 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:52:y:2011:i:2:p:185-198

DOI: 10.15057/22027

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