Unit 4 - Project
Teresa Heier
Kaplan University
MT 460-02
Professor Lisa Epstein
September 28, 2009
Executive Summary The main problem that Microsoft is having in Europe is with the antitrust ruling. As stated in the case “The immediate issue before the court is whether to uphold the European Commission’s landmark 2004 antitrust decision against Microsoft or to side with Microsoft in its appeal.” (Pearce-Robinson, 8-1) The two main issues that the case is about is Microsoft tying their media player in with the operating system and not willing to release their full specifications of their networking protocol. The EU Courts impose a remedy for Microsoft to release a copy of their operating system XP that did not include a
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Microsoft is not following their mission and values statement because they did not publish their network protocol documentation by the requested date from the EU Courts. They did release a version of their operating system XP N but that never really sold or took off in the markets. All in all Microsoft has been “convicted” of a monopoly.
Alternatives
Microsoft really needs to wake up before they get smacked in the face with more fines from the EU Courts. Some alternatives that Microsoft might be able to use would be only releasing an XP N operating system in the questioned markets. They also need to act more quickly to requests of the EU Courts. The Courts are not going to wait years upon years for their requests and documentation to be finished and submitted to them.
Recommendations
I would suggest they release only an XP N operating system in the EU markets. They also need to start listening to the Courts and working on matters in a more timely fashion. I would also recommend that Microsoft back off the EU market for a few years and lay low for a few years. If Microsoft does not comply with what the Courts want them to do ultimately the company will go out of business, maybe not in the next 10 or 20 years but in the long run.
References
Pearce, J.A. & Robinson Jr. R. B. (2007). Strategic Management. 11th ed. New York, NY: McGraw-Hill Irwin
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
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.
Microsoft has their dominance of the industry at stake. They could potentially come out on top if left to continue their current tactics. They are masterfully “marketing their products” and it is paying off for them (Love, 1997).
Pearce, J. A., II, Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin
Microsoft’s policy enables competition between PC producers resulting in lower prices. This also causes stratification of the PCs resulting in low-end, average, and luxury versions.
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).
America's century-old antitrust law is increasingly irrelevant to our current worldwide information technology market. This law is outdated, in accordance to the modern Microsoft situation, because in the past there wasn't technology as there is now. Recently the government has been accusing Microsoft as being a monopoly. "Techno-Optimists" claim that "efforts by government to promote competition by restraining high-tech firms that acquire market power will only stifle competition." Some analysts disagree. They concede that dynamic technology makes it tough to sustain market power. Still, consumers will want compatible equipment, which will lead them to buy whatever product other consumers are using,
G.G. Dess, G.T. Lumpkin, M.L. Taylor, A.A. Thompson, and A.J. Strickland III, Strategic Management (Boston, McGraw Hill, 2004) pp. 141-148.
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
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
Microsoft may feel that there is competitiveness in the relevant market, the facts behind the claims of the rival
Relatively speaking, Microsoft uses many of the same strategies for its promotions as Sony and Nintendo.
Microsoft and its supporter’s claims that they are not breaking any laws, and are just
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.
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?