Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Synopolies: The Use of Cryptographic Technologies to Impede Competition in Multiple Jurisdictions

Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Synopolies: The Use of Cryptographic Technologies to Impede Competition in Multiple Jurisdictions

Article excerpt

Part I--Introduction

Modern technology is rarely developed in a vacuum. (2) That is, only in exceptional circumstances is a technology developed that is not dependent upon or related to an existing technology. (3) More commonly new technology builds on, adds to, or compliments existing technologies. Intellectual property ('IP') laws generally are designed to give legal protection to the development of new technologies. In light of the exponential advancement of digital technologies, copyright laws have been substantially altered in recent time to provide extensive ancillary monopolistic protection through the recognition of technological protection measures ('TPM'). (4) Despite these recent changes to copyright laws and, in view of the ease by which digital materials may be copied, (5) authors and copyright owners are increasingly looking toward a technological solution to provide additional 'security' for their investment. (6)

In seeking this extra 'security' it is not uncommon for modern technology (which is not limited to information technology but can extend to other forms of technology such as genetically modified foods or chemical compositions) to be packaged in some form of 'black box' structure. (7) That is whilst the technology's functionality (the 'what' of its workings) is evident, the method of achieving that functionality (the technology design or the 'how' of its workings) is not. For the purpose of this paper, where any technology is packaged in such a way that the details of the technology design is not available (and thus requires some form of reverse engineering (8) to achieve the same functionality), that technology will be referred to as black box technology. (9)

Further, it is not uncommon for complementary organisations to want to link their respective products, which opens up or expands the marketability of each party's product. In the high technology environment the interoperability of the complementary organisations' combined product set may be linked through some black box technology.

There has been much academic research undertaken regarding the relationship between complementary organisations. The research of relevance to this paper is in respect of the concept of co-opetition, (10) whereby competitors both compete and cooperate so as to better provide market penetration for each participant. This paper however expands the concept of co-opetition by considering the legal position of two or more organisations, with a substantial degree of market power in their individual market, which are not necessarily in competition with each other and where each commercialises some technology that is complementary to the other's technology.

Issues relevant to the linking of technology products have previously been considered by the courts. For example, the consequences of illegal bundling and/or tying were thoroughly examined by the European Union ('EU') and United States ('US') in their respective Microsoft cases. (11) Whilst the conduct complained of was, inter alia, in relation to the failure by Microsoft to appropriately disclose 'interface information' to its competitors, those cases raise separate and unaddressed issues. That is, the structuring of the Microsoft products was such that they, and the interoperability codes, were not separately protected by any black box technology. What impact if any would this extra layer of technology protection have meant to the result? Is it possible that the regulators would have failed? Would regulators need to lobby the legislative body to extend/alter the law to ensure that such situations did not arise?

This paper will analyse the potentially anti-competitive impact of black box technology when used by complementary organisations to protect their individual technologies and to further advance the market penetration of the so-called 'bundled' product (12) in circumstances where the commercialisation of one product positively impacts on the commercialisation of the other. …

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