Information Rules: A Strategic Guide to the Network Economy

Information Rules: A Strategic Guide to the Network Economy
Chapter 10: Information Policy
(Presented by: Yatindra Naik and Shakeb Syed)
This chapter describes the government’s information policy and how it relates
to the strategies we have discussed in the previous chapters. Previously, we were
mainly concerned about information strategies in private, for-profit companies. Now
the outlook is slightly different, instead of looking at strategies to increase
profitability, we look at strategies to increase the net social benefits.
Following points summarize the chapter:
 The author discusses three major strategies which raise questions for
government policy, differentiation in product pricing, lock-in, positive
 The Robison-Patman act talks about the Price differentiation and it points out
that it is illegal, if it effectively reduces competition. Three set of legal
arguments that work to immune the legal challenges are also listed. Several
examples are provided to show how Differential pricing can be beneficial and
sometimes hurting to the customers.
 Also defined are several other Acts for competition like Sherman Act and
Clayton Act. These acts are explained and to look at how they are enforced
the philosophy behind them is outlined. It also talk about the choices the
government make’s when a powerful Monopoly spawn in the market.
 Policies inhabit monopolies from using strategies which might be legal for
other firms. Even small firms which are no where near monopolization should
be aware of these policies.
 All mergers are reviewed by the Justice Department or the FTC. Mergers are
blocked if they lessen the competition or if they harm consumers, owing to
either higher prices or lower quality. Standard setting process should not lead
to a cartel. Standard setting agreements also lead to patent cross licenses.
 Single firms can also run into trouble if they don’t yield the antitrust laws.
Issues like Exclusive dealing and Tying are to be avoided.
 Both the Government and the Private sector have a role to play in achieving a
critical mass and also in regulating rules as a way of promoting competition
and innovation. The chapter also describes a way to improve the value of the
Network goods by universally distributing them and making this choice on
grounds of Geography and Income levels.
Discussion Questions:
1. Which of the following software’s should be integrated with the Microsoft’s
Windows Operating System, justify your self.
Address Book, Outlook Express, Remote Desktop Protocol, Browser,
2. Justice Department and FTC gave a green signal to the merger of WorldCom
and MCI. On the other hand several software mergers have been challenged
and abandoned or modified, Adobe/Aldus (graphics software) and
Microsoft/Intuit (Personal Financial software). Why do the antitrust authorities
have this step-motherly attitude towards software mergers?
3. Do you think that in near future the following commodities will become Public
Internet Access, Goggle Search Engine