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 feedback. 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, Antivirus 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 utilities? Internet Access, Goggle Search Engine