Introduction / Charges against Microsoft
On July 15, 1994, the United States sued Microsoft for unlawfully maintaining its monopoly in the market for PC operating system software. The lawsuit alleged that Microsoft engaged in anti-competitive marketing practices directed at PC manufacturers that distributed Microsoft operating system software preinstalled on its PCs. Microsoft began to levy fines against original equipment manufacturing (OEM) companies who distributed or promoted operating systems other than Microsoft. On August 21, 1995, Microsoft "consented" to a "Final Judgement" against them.
As part of the "Final Judgement", Microsoft was prohibited from entering into agreements allowing them to fine OEM's for using
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The consent decree also prohibited Microsoft from requiring OEMs to license any other product as a condition of their Windows licenses. The government continued its investigation into Microsoft, primarily at the urging of Microsoft's competitors who felt that Microsoft was ignoring the conditions of the consent decree.
The war between Microsoft and the Department of Justice actually began with the rollout of Windows 95. In an attempt to gain a greater market share of the Internet browser arena, Microsoft began packaging Internet Explorer as part of their Windows operating system. Microsoft required their original equipment manufacturing (OEM) companies to install Microsoft Internet Explorer and Microsoft Networking software on every personal computer they sold along with icons for each application prominently displayed on the user's desktop.
Netscape and Sun Microsystems pressured the Department of Justice for action. Other competitor's felt Microsoft used "predatory and anti-competitive conduct" to impede other platform threats, thereby further entrenching its operating system monopoly. The Department of Justice continued its investigations and actively pursued investigations into the alleged monopolistic activities of Microsoft. During the course of the investigation, Microsoft and the Department of Justice continued to negotiate a new consent decree. After eighteen unsuccessful drafts, the Department of Justice, in conjunction with twenty state
Bill Gates and his company prosecuted many individuals and companies for software theft to show the world that intellectual property cannot be stolen without punishment. In 1998 Gates noticed that there was a huge gap between the number of computers being sold each year and the number of computer software. He quickly realized that many people were stealing computer software online. Gates knew that using computer software without paying was illegal and he intended to make everyone that stole their software pay the price for their crime. When Microsoft first discovered that their software was being stolen they decided that if people were going to steal software then they should steal Microsoft’s software and eventually Gates would find a way to collect money from his stolen property. Microsoft went after over 80 companies that they discovered were using their computer software without purchasing it and they pressed legal action and in the end got the money they had earned (Down to Earth). Before Microsoft prosecuted these companies for illegally downloading software, stealing intellectual property online was not considered important and legal action was almost never taken against those who committed the theft. Thanks to Bill Gates and his company intellectual theft is now taken
According to the Department of Justice, Microsoft used its resources and technology to drive other companies out of business, thereby eliminating the competition and creating a monopoly. Without competition, Microsoft was able to set prices and consumer conditions in a way that exceedingly benefited the company while ensuring a decreased amount of new competition because of the proprietary software installed in most PCs. (Competitive Processes, Anticompetitive Practices and Consumer Harm in the Software
The Justice Department maintains that the most critical concern involved Microsoft’s agreement to license a code to other companies, which allows rival products to communicate with Windows software. As of January 17, 2004, only eleven companies have chosen to license this code, most of which are not much competition for Microsoft. In addition, many companies are accusing Microsoft of demanding unreasonable fees and tedious restrictions for the code license (Krim, 2004).
- There were large cost amounts that the Department of National Revenue dealt with that Microsoft was supposed to be charged with.
United States vs. Microsoft is one the largest, most controversial antitrust lawsuits in American history. Many claim the government is wrongly punishing Microsoft for being innovative and successful, arguing that Windows dominates the market because of the product’s popularity, not because of malpractice by the parent company. Others argue in favor of the government, claiming that Microsoft’s practices conflict with the free market ideal. There are many arguments for both sides of the lawsuit, but what the case really comes down to is this: does the government have the right to interfere in today’s marketplace? Or is Microsoft violating laws that are rightfully imposed by the government?
The government has been looking into Microsoft since 1990, when the Federal Trade Commission first started examining charges of monopolistic behavior. In 1995, Microsoft and the U.S. Justice Department reached a settlement that required the company to change a variety of business practices, including key aspects of its licensing agreements with personal computer makers (2).
DOJ was not persuaded by Microsoft's argument that physical machines can more easily be counted than intangible copies of computer software. Nor was DOJ convinced that customers might actually favor long-term contracts to guard against unpredictable price increases and other uncertainties. This raised the question; did Microsoft exploit its dominant market position by "insisting" on "unfair" licensing arrangements? Of course not. Consider that Windows became the industry standard because PC-makers thought it was a "superior" product. An assessment that surely took into account the entire set of product features, not only technical features but also ease of use, quality, price, service, and contract terms. Just like any other product in the competitive market. Consider that there were no barriers that would prevent another competitor from driving Windows out as being the market leader. These are simple conditions that exist in an economic market. Those considerations, apparently, did not impress the DOJ's Antitrust Division.
Commencing in 1990, Microsoft was investigated and then charged with violation of the Sherman Antitrust Act which governs United States businesses. The company was determined to be a monopoly, and one which used anti-competitive practices to keep its leading edge on the market. As would most any organization on the receiving end of the allegations, Microsoft did not agree with the charges and sought to defend its business
* Refusal to deal: SesamWare rendered other companies inadequate to compete by strategically eliminating them from the market.
The case against Microsoft was brought buy the U.S. Department of Justice, as well as several state Attorneys General. Microsoft is accused of using and maintaining monopoly power to gain an unfair advantage in the market. The case has been under observation for a long time, but the Justice department is having trouble coming up with substantial evidence against Microsoft. Specifically, the Department must prove:That Microsoft has monopoly power and is using it to gain unfair leverage in the market.And that Microsoft has maintained this monopoly power through "exclusionary" or "predatory" acts(Rule).Some say that Microsoft is only taking advantage of its position in the market and using innovative marketing strategies
Windows” (“Microsoft: Court’s…). Microsoft implies that there still is competition; such as Mac OS, Linux, and other operating systems. Though this claim may have support, the “District Court found that Windows accounts for a greater than
Microsoft and its supporter’s claims that they are not breaking any laws, and are just
In 2013, the European Commission (EC) fined Microsoft $732 million for this anticompetitive behavior (Kanter, 2013). Although the fine was for anti-competitive behavior
The patterns I see with Microsoft’s reactions to competition is that they rely heavily on the fact that they are leaders in the field of operating systems and they use this monopoly as leverage on what they give out to their consumers with their “bundling capabilities” (Rivkin 4). In the past I believe they have been successful against competitors even though they have gotten into legal trouble while doing it. This is because even after the law suits they still remained ahead of the pack in market shares.
Both Office and Windows became dominant in their respective areas. Novell, a Word competitor from 1984–1986, filed a lawsuit years later claiming that Microsoft left part of its APIs undocumented in order to gain a competitive advantage.