Datel sues Microsoft over XBOX lockout. Kodak for tethered appliances?
Here is an interesting complaint, in which Datel alleges that MSFT retroactively disabled Datel’s memory cards for the XBOX 360 to protect MSFT’s own aftermarket sales. The primary claims are monopolization of the aftermarket for XBOX accessories and tying, based on (i) total manufacturer control of the aftermarket and (ii) a > 50% share of the equipment market (which excludes the Wii). Among the most notable allegations is the ex post modification of the XBOX by way of a required, downloadable “dashboard upgrade,” which could make the traditional ex ante lifecycle pricing counter argument somewhat challenging. More generally, this is a case addressing the “tethered appliances” problem that Jonathan Zittrain develops in The Future of the Internet in the context of antitrust/consumer protection.
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December 9th, 2009 at 5:10 pm
My ex-post rationalization for the Kodak decision is that the defendant’s change in aftermarket service policy prevented ex-ante lifecycle pricing from providing competitive discipline. This case seems to present a similar issue, assuming that consumers didn’t expect a required “upgrade” to disable their memory cards.