Microsoft Antitrust Paper Essay, Research Paper

Viewed together, three chief facts indicate that Microsoft enjoys monopoly power. First, Microsoft & # 8217 ; s portion of the market for Intel-compatible Personal Computer ( Personal computer ) runing systems is highly big and stable. Second, Microsoft & # 8217 ; s dominant market portion is protected by a high barrier to entry. Third, and mostly as a consequence of that barrier, Microsoft & # 8217 ; s clients lack a commercially feasible option to Windows, the operating system of all PC & # 8217 ; s.

Microsoft enjoys so much power in the market for Intel-compatible Personal computer runing systems that if it wished to exert this power entirely in footings of monetary value, it could bear down a monetary value for Windows well above that which could be charged in a competitory market. Furthermore, it could make so for a important period of clip without losing an unacceptable sum of concern to rivals. In other words, Microsoft enjoys monopoly power in the relevant market.

Microsoft possesses a dominant, relentless, and increasing portion of the global market for Intel-compatible Personal computer runing systems. Every twelvemonth for the last decennary, Microsoft & # 8217 ; s portion of the market for Intel-compatible Personal computer runing systems has stood above 90 per centum. For the last twosome of old ages the figure has been at least 95 per centum, and analysts project that the portion will mount even higher over the following few old ages. Even if Apple & # 8217 ; s Mac OS were included in the relevant market, Microsoft & # 8217 ; s portion would still stand good above 80 per centum.

Microsoft & # 8217 ; s dominant market portion is protected by the same barrier that helps specify the market for Intel-compatible Personal computer runing systems. As explained above, the applications barrier would forestall an aspiring entrant into the relevant market from pulling a important figure of clients off from a dominant

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incumbent even if the officeholder priced its merchandises well above competitory degrees for a important period of clip. Because Microsoft & # 8217 ; s market portion is so dominant, the barrier has a similar consequence within the market: It prevents Intel-compatible Personal computer runing systems other than Windows from pulling important consumer demand, and it would go on to make so even if Microsoft held its monetary values well above the competitory degree.

Microsoft & # 8217 ; s existent pricing behaviour is consistent with the proposition that the house enjoys monopoly power in the market for Intel-compatible Personal computer runing systems. The company & # 8217 ; s determination non to see the monetary values of other sellers & # 8217 ; Intel-compatible Personal computer runing systems when puting the monetary value of Windows 98, for illustration, is probatory of monopoly power. One would anticipate a house in a competitory market to pay much closer attending to the monetary values charged by other houses in the market. Another indicant of monopoly power is the fact that Microsoft raised the monetary value that it charged Original Equipment Manufacturer & # 8217 ; s ( OEM & # 8217 ; s ) for Windows 95, with fiddling exclusions, to the same degree as the monetary value it charged for Windows 98 merely prior to let go ofing the newer merchandise. In a competitory market, one would anticipate the monetary value of an older operating system to remain the same or diminish upon the release of a newer, more attractive version. Microsoft, nevertheless, was merely concerned with bring oning OEMs to transport Windows 98 in favour of the older version. It is improbable that Microsoft would hold imposed this monetary value addition if it were truly concerned that OEMs might switch their concern to another seller of runing systems or rush the development of feasible options to Windows.

Finally, it is declarative of monopoly power that Microsoft felt that it had significant discretion in puting the monetary value of its Windows 98 upgrade merchandise ( the operating system merchandise it

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sells to bing users of Windows 95 ) . A Microsof

T survey from November 1997 reveals that the company could hold charged $ 49 for an ascent to Windows 98 — there is no ground to believe that the $ 49 monetary value would hold been unprofitable — but the survey identifies $ 89 as the revenue-maximizing monetary value. Microsoft therefore opted for the higher monetary value.

Microsoft & # 8217 ; s first response to the menace posed by Netscape Navigator was an attempt to carry Netscape to construction its concern such that the company would non administer platform-level browse package for Windows. Netscape & # 8217 ; s acquiescence would hold ensured that, for the foreseeable hereafter, Microsoft would bring forth the lone platform-level browse package distributed to run on Windows, Internet Explorer. This would hold eliminated the chance that non-Microsoft browse package could weaken the applications barrier to entry. Executives at Microsoft received verification in early May 1995 that Netscape was developing a version of Navigator to run on Windows 95, which was due to be released in a twosome of months. Microsoft & # 8217 ; s senior executives understood that if they could forestall this version of Navigator from showing options, the engineerings branded as Navigator would discontinue to show an alternate platform to developers. Even if non-Windows versions of Navigator exposed Internet-related Application Programming Interfaces ( APIs ) , applications written to those APIs would non run on the platform Microsoft executives expected to bask the largest installed base, i.e. , Windows 95. So, every bit long as the version of Navigator written for Windows 95 relied on Microsoft & # 8217 ; s Internet-related APIs alternatively of exposing its ain, developing for Navigator would non intend developing cross-platform. Developers of network-centric applications therefore would non be drawn to Navigator & # 8217 ; s APIs in

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significant Numberss. Therefore, with the encouragement and support of Gates, a group of Microsoft executives commenced a run in the summer of 1995 to convert Netscape to hold its development of platform-level browse engineerings for Windows 95.

Most harmful of all is the message that Microsoft & # 8217 ; s actions have conveyed to every endeavor with the possible to introduce in the computing machine industry. Through its behavior toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will utilize its colossal market power and huge net incomes to harm any house that insists on prosecuting enterprises that could escalate competition against one of Microsoft & # 8217 ; s nucleus merchandises. Microsoft & # 8217 ; s past success in aching such companies and smothering invention deters investing in engineerings and concerns that exhibit the potency to endanger Microsoft. The ultimate consequence is that some inventions that would truly benefit consumers ne’er occur for the exclusive ground that they do non co-occur with Microsoft & # 8217 ; s opportunism.

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Bibliography

New York Timess:

“ How Microsoft Sought Friends In Washington. ” 7 November 1999: A33

“ Microsoft & # 8217 ; s Horizon. ” 7 November 1999: A33A

“ A Breakup Of Microsoft? Possibly, but Investors Shrug It Off. ” 9 November 1999: C1-C16

“ Prosecutors Seeking To Interrupt The Grip Of Windows System. ” 10 November 1999: A1-C30

“ Microsoft Faces A Class Action On & # 8216 ; Monopoly. & # 8217 ; ” 22 November 1999: A1-A16

USA Today:

“ Conservative justice at helm of Microsoft negotiations. ” 22 November 1999: B1-B2

“ Microsoft findings spur case findings. ” 23 November 1999: B2

The Wall Street Journal:

“ Microsoft Hopes for GOP Savior, but States Are Problem. ” 9 November 1999: A28

Fiscal Timess:

“ Experts say Microsoft instance will drag on. ” 9 November 1999: 11

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