Innovation

Startup firms benefited importantly also from post-war antitrust policy. Settlement of the AT&T suit in 1956 had two ramifications for new microelectronics f irms: first, liberal patent licensing terms set down by the consent decree, and second, prohibitions constraining AT&T from business activities beyond telecommunications. AT&T, with at the time the greatest technological capabilities in microelectronics, was thus blocked from entering into commercial production of microelectronic devices, which paved the way for startup firms.

IBM also lost an antitrust suit in 1956, which mandated liberal licensing of the firm’s punch card and reasonable rates for computer patents.. Indirectly, major postwar antitrust suits probably supported startup firms by deterring the established firms from continuing their prewar pursuit of new technology through acquisitions of smaller firms. A final postwar stimulant for new firms was US military procurement policy, which in the 1950s and ’60s opened the