Microsoft Antitrust Case Essay, Research Paper

Microsoft Antitrust Case

Since 1998, the Microsoft Corporation has been fighting with an antimonopoly instance against the United States Justice Department. They are being charged with go againsting facets of the Sherman Act. This act prohibits companies from utilizing their size and power as a monopoly to spread out their places and take clasp of new markets. It is non illegal for a company to be a monopoly, but it is illegal for the company to utilize their size as an advantage over other companies ( Lohr article 1 ) . I believe that the Microsoft Corporation is in misdemeanor of the Sherman Act and the United States authorities should take actions against the company to supervise their concern minutess and prevent this from go oning once more. There are many illustrations of how the Microsoft Corporation used their size as an advantage over other companies to derive advantages in the package and computing machine market.

Compaq is one of the largest computing machine manufacturers in the state. They are the largest clients of the Microsoft Corporation. They buy most of their package from them to lade on their computing machines for sale. Compaq considered lading the Netscape Navigator plan as default alternatively of the Microsoft Internet Explorer. Netscape is Microsoft & # 8217 ; s chief competition in the cyberspace browser market. When Microsoft found out about this determination, they threatened to halt selling the Windows plan to Compaq ( Lohr and Markoff ) . Windows is the most popular plan on the market, and it controls at least 85 per centum of the computing machines. If Compaq were non able to sell their computing machines with the Windows plan, their gross revenues would plump. Their merchandise would non be every bit attractive to consumers without the plan because of its popularity. This is an illustration of Microsoft utilizing their power as a monopoly to command other companies. Harmonizing to the Sherman Act, a company can non utilize their size as an advantage over other companies when it comes to advancing their merchandise in a new market. Compaq new that if they sold their computing machines without the Windows plan, their company would endure, so they decided to utilize Microsoft & # 8217 ; s Internet Explorer alternatively ( Lohr and Markoff ) .

Microsoft supplies many computing machine companies with the plans that are needed to run their merchandises. They besides design plans for the Apple computing machine company, because their computing machines need a type of package different from other computing machine companies. Microsoft designs a word processing plan specifically for Apple ( Brinkley article 1 ) . They threatened to halt doing this plan for Apple if they did non utilize their Internet Explorer plan as the default on their merchandises. Microsoft besides threatened to halt selling the Office plans to them if they did non utilize their cyberspace browser on their computing machines. Microsoft Office is tantamount to the Windows plan in the concern package market. This plan has about 90 per centum of the gross revenues for office package ( Brinkley article 1 ) . If the Apple corporation could non offer the Microsoft Office plan on their computing machines, their gross revenues would endure. This state of affairs is similar to the Compaq state of affairs because Microsoft is utilizing their power as a monopoly to command the cyberspace browser market. Companies are non allowed to utilize their size and power to advance their merchandises in new markets. This is precisely what the Microsoft Corporation is making in each of these state of affairss. They are in misdemeanor of the Sherman Act, and there should be actions taken against them to forestall this from go oning once more ( Brinkley article 1 ) . Apple was forced to do Microsoft & # 8217 ; s cyberspace browser the default on their machines out of fright of losing the plans that they evidently needed to sell their merchandises. Companies should be able to do determinations about their merchandises without holding to worry about other companies intimidating them with menaces.

A contention has arisen over Microsoft & # 8217 ; s Windows 98 plan. Its release was delayed because the Microsoft Corporation wanted to include the Internet Explorer plan as a characteristic. This hold has been a subject of treatment in the tribunal instance. The U.S. Justice Department says that Internet Explorer and Windows 98 are two separate plans and that Microsoft bundled them together to derive an advantage over their chief rival, Netscape. Microsoft says that the Internet Explorer plan is merely a characteristic of Windows 98, and that the two are non separate plans ( Lohr article 2 ) . By the two plans being put together, consumers are now non required to purchase a separate cyberspace browser. In January of 1997, an email exchange between two Microsoft executives suggests that the browser and the operating system were two separate plans, and the company did non see them one merchandise. The electronic mail talked about how they should utilize Windows to advance their merchandise because it was the lone thing that Netscape did non hold ( Lohr article 2 ) . It is illegal for a company to coerce a 2nd merchandise on a client by binding it in with another market taking merchandise ( Lohr article 3 ) . Microsoft is utilizing their fastness on the package market to enforce their cyberspace browser on its clients. By making this, they are extinguishing any competition in the cyberspace browser market. About 85 per centum of computing machines are run by Windows, and by bulking it with an cyberspace browser, they are extinguishing any demand for another I

nternet browser ( Lohr article 2 ) . If they eliminate any competition in the package market, they may besides forbid any progresss in new engineering. There are ever new progresss in package and computing machine engineering, and Microsoft may be extinguishing that possibility if they continue with their current patterns.

Microsoft is accused of doing an illegal offer to their chief competition in the cyberspace browser market, Netscape. Their offer was an effort to split the cyberspace browser market. Microsoft offered Netscape information that would assist them plan a plan that would run every bit swimmingly as possible with the Windows plan. In return for the information, Microsoft would put in Netscape and take 15 to twenty per centum ( Lohr and Markoff ) . Microsoft would besides have a topographic point on Netscape & # 8217 ; s board of managers and licencing privileges to licencing their new engineering. All hardware and package must run swimmingly with Windows because of its popularity in the market. The information that Microsoft purportedly offered Netscape would hold been really utile to their package design. Netscape declined the offer from Microsoft. Microsoft denies claims that their aim was to halt Netscape from viing with them in the cyberspace browser market ( Lohr and Markoff ) . The justness section has a pledged testimony from Chris Jones, a Microsoft director, acknowledging that Microsoft & # 8217 ; s purposes were to carry Netscape from viing. Microsoft claims that Jones & # 8217 ; s testimony explains how they wanted to go spouses with Netscape. They say that they wanted to split the applications and design of the plans between the two companies, so the two could work together in the industry ( Lohr and Markoff ) . If it is concluded that Microsoft & # 8217 ; s offer was illegal, they are in misdemeanor of the Sherman Act. These are each illustrations of how Microsoft used their power as a monopoly to spread out their place. A impersonal 48 page paper was written to depict some of the allegations against Microsoft every bit good as some information in their defence ( Lohr article 3 ) .

Chris Hall, an independent package developer, wrote the paper. He explains how there are holes in the allegations against Microsoft. He says that the authorities informants who say Windows and Internet Explorer are two separate plans have small virtue ( Lohr article 4 ) . Hall besides talks about the low monetary value of the Windows plan. He says that the low monetary value does non reflect that of a monopoly mistreating its power. The cost of the plan merely accounts for about five per centum of the entire cost of the computing machine. Microsoft says the low monetary value of Windows is due to competitory menaces of competition ( Lohr article 4 ) . They say that any other computing machine package company could come out with a plan that competes with Windows. An executive from Compaq is attesting in Microsoft & # 8217 ; s defence to province the possibility of another plan to originate to vie with Windows ( Lohr article 4 ) . Although these illustrations of defence are valid, the illustrations against Microsoft far outweigh them.

The test is still pending. If Microsoft is found guilty of go againsting the Sherman Act, it will be really hard to make up one’s mind what actions to take against the company. The justness section is beging thoughts from outside beginnings for suggestions on a redress to the state of affairs. They have been inquiring antimonopoly experts on their sentiments of the instance. Timothy F. Bresnahan, an economic science professor from Stanford University, has taken a leave from his occupation to assist the Justice Department invent a proposal for a redress ( Brinkley article 2 ) . Government informant, William H. Harris & # 8217 ; s redress proposal suggests interrupting the Microsoft Corporation into separate companies. His proposal besides calls for authorities ordinance on the industry ( Brinkley article 3 ) . There are many possible redresss that can be taken to manage the instance, and it may take a long clip for the judicial system to come to an understanding.

Microsoft has made many hapless concern determinations and abused their position as a monopoly. They clearly used unjust concern patterns that prohibited other companies from spread outing and viing. There are far more valid illustrations of Microsoft & # 8217 ; s unfair concern patterns representing their maltreatment of power. The judicial system should take actions against Microsoft by supervising their concern patterns closely to forestall them from mistreating their power.

Brinkley, Joel. & # 8220 ; Microsoft Defends Tactics In 1997 Negotiations With Apple. & # 8221 ; New York

Timess 5 Nov. 1998: C2.

Brinkley, Joel. & # 8220 ; U.S. and State Officials Weigh Microsoft Remedies. & # 8221 ; New York Times

16 Nov. 1999: C1.

Brinkley, Joel. & # 8220 ; Intuit & # 8217 ; s Chief Urges Division of Microsoft. & # 8221 ; New York Times 5 Jan.

1999: C2.

Lohr, Steve. & # 8220 ; Gates. On Capitol Hill, Presents Case for an Unfettered Microsoft. & # 8221 ; New

York Times 4 March 1998: A1.

Lohr, Steve. & # 8220 ; Browser Memos Pose Challenge To Microsoft. & # 8221 ; New York Times 5 Nov.

1998: C1.

Lohr, Steve. & # 8220 ; Filing Offers a Manner to happen Microsoft Violated the Law. & # 8221 ; New York

Timess 2 Feb 2000: C8.

Lohr, Steve. & # 8220 ; Business ; Playing & # 8216 ; The Price is Right & # 8217 ; With Windows. & # 8221 ; New York Times

3 Jan. 1999: Sec. 3 pg. 4.

Lohr, Steve and Markoff, John. & # 8220 ; Microsoft & # 8217 ; s World: A Special Report. & # 8221 ; New York

Timess 8 Oct. 1998: A1.