Case of United States Versus Microsoft
United States versus Microsoft Corporation case was a set of combined civil engagements filed against Microsoft relating to the Sherman Antitrust Act by the Department of Justice. In the case, the Department of Justice purported that Microsoft abused monopoly supremacy on PCs in its control of OS sales and web browser software sales (Lohr& Brinkley, 2001). The conflict evolved around the integration of the internet explorer browser software in Microsoft’s Windows OS; a move that was argued to restrict web browser competitors like Opera and Netscape from accessing the browser market. Microsoft argued that it did not have a case to answer and stated the misfortune was the result of the fierce competition and innovation strategies in its industry (Glader, 2006). The following paper aims at analyzing the merits generated from the final settlement of the case and outlines the parties that benefited and those whose interests were harmed.
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.
The planned settlement is a concession reflecting the reality that ending the hearing would expose Microsoft to an undefined result and would put the government case at risk. The government dropped numerous basics of the conduct remedies that they had accomplished in the original hearing and the ...
... middle of paper ...
...ides PC manufactures that right, which is not limited to Internet Explorer but also serves other numerous software developers falling under the settlement’s description of middleware.
Works Cited
Cseres, K. (2005). Competition law and consumer protection. London, UK: Kluwer Law International.
Evans, D. S. (2002). Microsoft, antitrust and the new economy: selected essays. New York, NY: Springer.
Glader, M. (2006). Innovation markets and competition analysis: EU competition law and US antitrust law. Camberley, UK: Edward Elgar Publishing.
Lohr, S. & Brinkley, J. (2001). U.S. v. Microsoft. New York, NY: McGraw-Hill.
Perritt, H. (2001). Law and the information superhighway. New York, NY: Aspen Publishers Online.
Rubini, L. (2010). Microsoft on Trial: Legal and Economic Analysis of a Transatlantic Antitrust Case. Camberley, UK: Edward Elgar Publishing.
Perhaps the best solution to Microsoft’s authority would include structural remedies, such as the divestiture remedy, which may be less subject to gaming, but pose the risk of substantial costs. However, other sources suggest that the most effective remedy may be that the government’s victory eases the way for plaintiffs in private antitrust suits to collect monetary damages, which could be sufficient to deter future anticompetitive conduct (Journal of Economic Perspectives). Whatever the approach to resolving this issue may be, it is certain that the Microsoft monopoly can no longer enjoy its precedent benefits. Nonetheless, there remains a grand possibility that Microsoft will be able to maintain its power to at least some extent, due to the fact that their products are needed, and their competition remains inadequate.
Back in John D. Rockefeller’s day the business moves he established that created a monopoly were highly intelligent and immoral. He was the first person to build a monopoly setting guidelines for future business leaders. Nonetheless, Microsoft ignored the regulations established under The Sherman Antitrust Act, in 1890 and committed a monopoly but finally settled to make it easier for competitors. Monopolies have been happening since the 19th century to the 21st, but remained unfair form hundreds of
In 1994 the Department of Justice (DOJ) filed a complaint against Microsoft saying that Microsoft had an exclusive contract with original equipment manufacturers (OEMs) which is anticompetitive and allows Microsoft to maintain their monopoly for PC operating systems. A settlement was made which disallowed Microsoft from making integrated products and restricted their licensing activities by not tying software products together. In 1997 the DOJ returned to court saying Microsoft has violated the consent decree as Microsoft to keep up with the new competition has tied Internet Explorer with their OS. This violates the decree. The DOJ was successful in the District Court. It was then brought to the Court of Appeals. The case consisted of the Department of Justice, Attorney Generals from 20 states and the District of Columbia where they sued Microsoft for monopolising the market for operating systems, having anti-competitive contracts with OEMs, attempting to monopolise the market for internet browsers and for integrating their web browser with their operating system. Microsoft was found liable...
The facts of the case according to Judge Jackson show that Microsoft was violating the Sherman Antitrust Act. They were in the process of doing so by allegedly maintaining a monopoly power by anticompetitive means as well as attempting to monopolize the Web browser market. Microsoft was also accused of forcefully attaching its Internet Explorer Web browser to its windows operating system. They were also accused of making marketing arrangements with other companies, such as Apple, which were constituted unlawful exclusive dealings. These action by Microsoft were in violation of both section 1 and 2 of the Sherman Antitrust Act.
In an attempt to decrease competition in the computer technology industry, Microsoft had violated the Sherman Antitrust. In the 1998 case of U.S. vs. Microsoft, the Microsoft company was charged for anticompetitive and monopolistic practices that violated antitrust laws. The plaintiff had claimed that Microsoft had engaged “in a series of exclusionary, anticompetitive, and predatory acts to maintain its monopoly power” (Excerpts) which went against Section 2 of the antitrust law. Microsoft had also allegedly violated Section 1 by “tying its browser to its operating system and entering into exclusive dealing arrangements” which was ruled as a “combination… in restraint of trade or commerce” (Excerpts). The Court ruled against Microsoft, exemplifying the ability of the Sherman Antitrust to curb unethical and illegal monopolistic operations even in modern
I believe that Microsoft has the best intensions for society, because they are constantly developing the software market into a more competitive and challenging industry. Microsoft’s success as a company is partly due to its commitment to making the best product possible and strategic business practices. The first reason Microsoft is not a monopoly is because of the standardized quality of its OS. Second is the intelligent business practices Microsoft has engaged in through many of its business partners. The legal issues of the alleged antitrust accusations from the department of justice are just totally overrated.
Stucke, Maurice E. "Journal of Antitrust Enforcement." Is Competition Always Good? N.p., 4 Feb. 2013. Web. 14 Jan. 2014.
Competition law in the European Union has developed from being an uncertain preoccupation of a few economists, lawyers and officials to one of the leading competition law system in the globe. Nonetheless, in agreement with most commentators, there are inherent flaws within the EU Commission’s procedures. This paper aims to provide an account of concerns in the current system, drawing comments from scholars and EU officials in order to demonstrate both benefits and shortcomings of the system. An overview of the legal and policy debate of the current EU Competition enforcement will be presented as the introduction. Policy concerns such as prosecutorial bias and self-incrimination in enforcement powers will be the main subjects for the purpose of this paper, followed by analysis of the EU commission structure, in particular checks and balances and the hearing process, both of which have been claimed being incompatible with the ECHR. A comparison with the US Antitrust system will also be paralleled through out this essay in order to demonstrate a clearer examination. This essay will conclude with the Commission’s flaws that have effected on the upcoming UK competition law reforms.
"Microsoft Corporation, is a multinational computer technology corporation with global annual revenue of US$44.28 billion and 71,553 employees in 102 countries as of July 2006. It develops, manufactures, licenses, and supports a wide range of software products for computing devices. Headquartered in Redmond, Washington, USA, its best selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software, each of which has achieved near-ubiquity in the desktop computer market. Microsoft possesses footholds in other markets, with assets such as the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta multimedia encyclopedia. The company also markets both computer hardware products such as the Microsoft mouse as well as home entertainment products such as the Xbox, Xbox 360 and MSN TV" ("Microsoft").
Predatory pricing “is alleged to occur when a firm sets a price for its product that is below some measure of cost and forfeits revenues in the short run to put competitors out of business” (Sheffet p.163-164). The reason firms take the short term loss is because they hope to drive out competitors and raise prices to monopolistic levels. By doing this, they covered their short term loss to make even greater profits in the long term than they would have by not using predatory tactics (Sheffert). Predatory pricing became illegal under Section 2 of the Sherman Act. It has remained one of the more difficult allegations for prosecutors to prove, due to the complexity of determining the company’s actual intent and whether or not it the strategy is competitive pricing. According to Areeda and Turner, there are three ways to determine if a firm is implementing predatory pricing. First, a price above marginal cost is presumed lawful; second, a price below marginal cost is considered unlawful, except when there is strong demand; and third, average variable cost is considered a good proxy for marginal cost. This is a reason predatory pricing is still important today. The courts must decide whether or not companies are engaging in competitive prices for the good of the consumers or are using predatory tactics for the good of their own company. The purpose of this paper is to focus on the current legislation regarding predatory pricing, determining when there is predation in an industry and the cause and effect relationship it has on an industry.
The Internet was growing at an outstanding pace and many people believed that it was going to affect every business. However, Gates dismissed the Internet and Netscape as unimportant, saying that they would have no impact on him. He quickly found out how wrong he was and how these new threats in the environment were going to affect his business, and he managed to find the way for converting this threat into an opportunity. Thus, he changed the direction of his strategy and he entered into a new business: the Internet world. He realized that he was missing out an opportunity in the market that could make his company grow in a huge way; so he adopted a follower strategy, which is very ironic knowing that they have always been the leaders. He strategically fit-in by matching his resources and strengths (capital, know-how and people) to the changing environment. As Netscape was ahead he needed to act quickly before it was too late, so he took advantage of his power as a leader and focused on regaining position over Netscape by adding the browser as an integral part of Windows, giving free copies to the public and forcing manufacturers to install the browser on the machine. In other words, he used his best existing resource which was Microsoft Windows as part of the strategy and used his monopoly to stifle competition and defeat its rivals. However, this strategic choice could have never succeeded at the business level, if Microsoft wouldn’t have the competitive advantage of understanding the customer and the market as they do.
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.
Although ADR is an appealing alternative to litigation today, throughout the early history of the United States, courts expressed much hostility toward the idea of enforcing an agreement through any alternative dispute resolution. Throughout the 1900’s, United States courts were reluctant to enforce any agreement to arbitrate an existing or future dispute unless a specific statute...
Miller, R. (2012). Monopolistic Competition: The Micro View (17th ed. pp. 555-572). Boston, MA: Addison-Wesley.
I don’t think the court should have given Microsoft a penalty anyway. I feel the government was harsh with just the fact Microsoft was considered a monopoly. I feel that the government should’ve just given Microsoft a fine and another form of compromise so they can ensure their conduct is up to par. In this way, there won’t have to be any worries about companies becoming monopolies.