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Measuring the usage effects of tying a messenger to Windows: a treatment effect approach

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  • Myoung‐jae Lee

Abstract

Summary. The US case on tying Microsoft Internet Explorer to Windows has received much attention. In Europe, a similar case of tying the Microsoft media player to Windows appeared. Recently in Korea, another similar case of tying a Microsoft messenger to Windows occurred. In the messenger tying case (as well as in the other tying cases), Microsoft's main defence seems to be threefold: tying enhances efficiency, the Microsoft product is better or better marketed and tying is inconsequential because the user can easily download free competing products. The paper empirically addresses the third point. Korean data, used as evidence in the trial of the case, reveal that tying the Microsoft messenger to Windows increased the probability of choosing the Microsoft messenger as the main messenger by 22% for Windows Millennium and 35% for Windows XP. There is also evidence that tying shortened the duration until the Microsoft messenger is adopted by about 2–4 months, compared with the duration until the adoption of a competing messenger. Hence tying provided Microsoft with an almost instant non‐trivial advantage in the messenger market ‘race’—the advantage derived from the dominant position in the operating system market.

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  • Myoung‐jae Lee, 2010. "Measuring the usage effects of tying a messenger to Windows: a treatment effect approach," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(1), pages 237-253, January.
    • Handle: RePEc:bla:jorssa:v:173:y:2010:i:1:p:237-253
    DOI: 10.1111/j.1467-985X.2009.00619.x
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    References listed on IDEAS

    as
    1. Jay Pil Choi, 2004. "Tying and innovation: A dynamic analysis of tying arrangements," Economic Journal, Royal Economic Society, vol. 114(492), pages 83-101, January.
    2. Lee, Myoung-jae, 2005. "Micro-Econometrics for Policy, Program and Treatment Effects," OUP Catalogue, Oxford University Press, number 9780199267699.
    3. Myoung‐Jae Lee & Yoon‐Hee Tae, 2005. "Analysis of Labour Participation Behaviour of Korean Women with Dynamic Probit and Conditional Logit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 71-91, February.
    4. Michael D. Whinston, 2001. "Exclusivity and Tying in U.S. v. Microsoft: What We Know, and Don't Know," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 63-80, Spring.
    5. Choi, Jay Pil & Stefanadis, Christodoulos, 2001. "Tying, Investment, and the Dynamic Leverage Theory," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 52-71, Spring.
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