The Microsoft Antitrust Case Is the Most Signifi cant Monopoly Case since the Breakup of AT&T in the Early 1980s.
The Charges In May 1998 the U.S. Justice Department (under President Clinton), 19 individual states, and the District of Columbia (hereafter, “the government”) filed antitrust charges against Microsoft under the Sherman Antitrust Act. Microsoft had violated Section 2 of the act over a series of illegal actions planned to keep its “Windows” monopoly. The government also charged that some of that behavior violated Section 1 of the Sherman Act.
Microsoft refused the charges, arguing it had succeeded through product innovation and lawful business performs. Microsoft opposed it should not be punished for its excellent forethought, business insight, and technological ability. It also stated that its monopoly was highly temporary because of fast technological development.
The District Court Findings In June 2000: district court directed that the related market was software used to run Intel compatible personal computers (PCs). Microsoft’s 95 percent share of that market clearly gave it monopoly power. The court noted, however, that being a monopoly is not illegal. The violation of the Sherman Act happened because Microsoft used monopolistic means to continue its monopoly power.
According to the court, Microsoft was afraid that the success of Netscape’s Navigator, which allowed people to surf the Internet, might allow Netscape to develop its software to contain a competitive PC operating system (software that would warn the Windows monopoly). Moreover, that Sun’s Internet applications ‘Java’ programming might finally jeopardize Microsoft’s Windows monopoly.
To counter these and similar dangers, Microsoft unlawfully signed agr...
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...them with other icons on the Windows desktop; and (4) calls for Microsoft to deliver technical information to other firms so that they can improve programs that work as well with Windows as Microsoft’s own products.
The Microsoft actions and opinion have indirectly caused in billions of dollars of fines and expenses by Microsoft. Main examples: To AOL Time Warner (Netscape), $750 million; to the
European Commission, $600 million; to Sun Microsystems, $1.6 billion; to Novell, $536 million; to Burst.com, $60 million; to Gateway, $150 million; to Inter Trust, $440 million; to Real Networks, $761 million; and to IBM, $850 million.
Source: United States v. Microsoft (District Court Conclusions of Law), April 2000; United States v. Microsoft (Court of Appeals), June 2001; U.S. v. Microsoft (Final Judgment), November 2002; and Reuters and Associated Press News Services.
“Processor Editorial Article - Antitrust Laws: Not Just For The Big Boys.” Editorial.Processor 19 Nov. 2004: 27+. Processor.com. Web. 29 Nov. 2011 .
The Sherman Act outlaws every contract, combination or conspiracy in restraint of trade. It also prohibits any attempt to monopolize. The Sherman Act enforcement can be civil or criminal. The criminal penalty can be up to $1 million for an individual and $100 million for a corporation. The Federal Trade Commission Act bans unfair methods of competition and deceptive acts or practices. Violation of Sherman Act also violates Federal Trade Commission Act. The Sherman Act and Federal Trade Commission Act are very effective, but they do not address certain specific practices. The Clayton Act addresses some specific practices such as mergers and interlocking directorates. For example, Section 7 of Clayton Act prohibits mergers and acquisitions that lessen competition or tend to create monopoly. Apart from these three core antitrust acts, most states also have antitrust laws. (FTC, 2014)
The first of the three major Federal antitrust laws is the Sherman Act that was created in 1980. This act will not allow for competitors to set a fixed price on a good or allow for one company to become a monopoly. Breaking the Sherman Act can be punished normally as a criminal felony with individuals being fined up to $350,000, businesses being fined up to $10 million and corporations up to $100 million per offense. There is also jail time that can be served by each with the individual who can be sentenced up to three years in jail and a business up to ten years in prison per offense when the Sherman Act is violated.
The United States v Microsoft Corporation tentative settlement generated widespread controversy. Numerous critics, mainly Microsoft’s rivals and competitors in the technology sector, have claimed that the planned consensus does not go far enough in punishing Microsoft for the apparent offenses they committed. Analyzing the case as an economist, however, points me to a rather different assumption that the settlement is desirable to the substitute of further litigation.
By law a monopoly is not allowed to exist in the US. It has been long debated whether Microsoft is a monopoly or not? Among other charges Microsoft was charged with "monopolizing the computer operating system market, integrating the Internet Explorer web browser into the operating system in an attempt to eliminate competition from Netscape, and using its market power to form anticompetitive agreements with producers of related goods" (SWLearning).
In this paper, team B will discuss the internal and external factors of the Microsoft Corporation. We will explain how these factors affect the four functions of management, planning, organizing, leading, and controlling. Also, we will explain how globalization, technology, innovation, diversity and ethics will be delegated to manage the different factors. Microsoft Corporation was established in 1975 in Albuquerque, New Mexico producing software for developing, manufacturing, licensing, and support for range of software products and service for different type of computing devices. Microsoft grew from six employees to the largest personal computer software company in the world. By 1978, Microsoft earned $500,000 in the first quarter, and by the end of the year they earned revenue of $1,000,000. In the early 1980s Microsoft, in collaboration with IBM they released MS-DOS as their first 16-bit operating system. However after the late 1980s, Microsoft started to build its reputation by creating the Microsoft windows operating system and Microsoft office product, which includes internet explorer, excel, PowerPoint, and word programs. Then in the late 1990s, Microsoft teamed with Sega to incorporated their windows software package into the game developer’s Dreamcast hardware. Also they developed their own gaming system called the Xbox and that eventually was replaced by the xbox360. Microsoft has come a long way and is no longer just a worldwide leader in computer programming but also a major part of the technology world. Microsoft windows have been the flagship and accounts for most of its revenue for Microsoft: but the company has also branched ...
Microsoft’s mission of placing a “PC running Microsoft software on every desk and in every home” drove their overall strategy early on. Depending on the business segment within Microsoft, one would see in place very different business models as the strategy for each line of business could vary. In the operating system (OS) segment, Microsoft initially brought in an existing product and modified this (MS-DOS) to work with the Intel microprocessor, which were the “brains” of the IBM PC. Microsoft partnered with IBM to provide the operating system for the IBM PC. In addition to developing Windows, Microsoft during this period was working to write applications for the Apple OS.
In 1994, Marc Anderseen invented a new way to search and retrieve information from the Internet: the Netscape Navigator. Netscape’s rising sales and the phenomenal growth of the Internet make its shares go through the roof and even before the Company had any profit; it was valued at $2.7 billion. However, the scenario didn’t go that well for so long and a very powerful and ambitious man came into the picture. Bill Gates put 2,000 of his best programmers to create a browser of his own: The Explorer. The battle of the browsers officially started; Microsoft’s share of the browser market increased from 2.9 percent at the end of 1995 to more than 40 percent by the end of 1997, while Netscape’s market share fell to 54 percent.
And then there's Microsoft themselves. After Bill Gates handed over CEO to Steve Ballmer, all hell broke loose as humans raged about him. During the first twenty years of Microsoft, they were considered an evil monopolistic empire, destroying all competitors that came their way. Back then, if you wanted word processing software, you used Office. Want a computer o...
“His agreements with hardware manufacturers have often served to prevent the success of rival products even when they are already on the market and Microsoft versions have yet to be completed. In 1995, the development of Windows 95, a revolutionary operating system, drove hardware manufacturers to produce computers with more memory and more hard disk space. Microsoft thus effectively compelled the entire computer industry to follow its lead. Such practices involved Gates and Microsoft in legal struggles over alleged anticompetitive practices and copyright infringement throughout the 1990s”(McGuire 1). With their more advanced operating systems they had to have more advanced computers that can run them but the other companies couldn't update their operating system as fast.
The standardized quality of MS Windows98 has really made the PC market as a whole take a rocket boost from the past. Most people who oppose this stance would say that standardizing a product wouldn’t cause anything but a monopoly. This is fiction because people choose products that are simply reliable and of good quality. The success of Microsoft’s operating system hasn’t been used to cause a monopoly in the browser marker, but to increase the quality of their software. A statement from Bill Gates on the 7th of December stating “ I am proud of the work our people have done to bring the benefits of the Internet to consumers, and I am confident that the courts ultimately will uphold the importance of the freedom to innovate.” The intensity of the Internet lies in it openness, freedom and incredible reach. It is physically impossible for any individual or company to be its controlling switch, as the number of Internet users continue to grow by easy access due to Internet technologies being added to quality operating systems such as Windows. Internet user will constantly demand high quality and maximum choice, and will travel to wherever they receive the best value for the money and time. As consumer interest in the Internet continues to grow, Microsoft’s role will be what it always has been. Aimed to provide the software building blocks for a rich computing experience and to build into that software all of the open Internet standards, protocols and platforms services which enable developers to write great applications. Even though Microsoft has included Internet capabilities in its Windows operating system since the launch of Windows 95, the Windows platform also provides excellent support for other leading browsers besides Microsoft’s own Internet Explorer.
Van Baker, a marketing analyst, believes that the release of Vista may have pushed Microsoft closer towards meeting the higher expectations of today’s computer users.
Microsoft has always been known as a software company, and not well known for its hardware. In fact, the only hardware that Microsoft sells to the retail market is branded peripherals. In its heyday, Microsoft was a market leader, bring an operating system to the masses, and leading in internet search. In recent years, however, most of the moves that Microsoft has made have not been in a market leader position, but have been in response to competitors threatening Microsoft’s positions.
Gates suggested that IBM “license it and charge a fee for the software” (Bill. Biography). Over the next three years, everything “exploded” and the stock price shot up. Gates and Allen incorporated Microsoft, with Gates as president and Chairman” (Bill. Biography). Microsoft was eventually “running thirty percent of the world’s software”. The IBM deal was possibly the biggest event in the history of Microsoft.
Microsoft is the leading and the largest Software Company in the world. Found by William Gates and Paul Allen in 1975 Microsoft has grown and become a multibillion company in only ten years. It all started with a great vision – “a computer on every desk and every home” - that seemed almost impossible at the time. Now Microsoft has over 44,000 employees in 60 countries, net income of $3.45 billion and revenue of 11.36 billion. Company dramatic growth and success was driven by development and marketing of operational systems and personal productivity applications software.