The Microsoft Antitrust Story Essay

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

Microsoft has developed into an inescapable force within the technological field. Coming from a delayed humble beginning, it has had to devote large sums of money to approach the levels of the founding technological companies. Today, Microsoft controls the market in computer software. How they have achieved this status is what some have come to question. Through “bundling” software programs, manipulating other computer companies, and packaging deals with personal computers, Microsoft has managed to eradicate nearly all competitors in the computer software market (Love, 1997). This near monopoly affects the entire spectrum of classes, including the consumer, other networking providers,

They have expand their business from only on computer software and hardware to online search engine, home gaming devices and smartphone, those business are the popular business in the world, Microsoft is trying to adapt the new market.

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?

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.

The Justice Department and the states contend that Microsoft is violating the Sherman Antitrust Act, which was passed by Congress in 1890. The act has two sections. Section I prohibits certain types of agreements that restrict the flow of trade. Section II prohibits the misuse of monopoly power, namely anti-competitive actions that seek to maintain that monopoly power and actions that attempt to use that monopoly power to dominate another market (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,

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

Competition in economics is rivalry in supplying or acquiring an economic service or good. Sellers compete with other sellers, and buyers with other buyers. In its perfect form, there is competition among many small buyers and sellers, none of whom is too large to affect the market as a whole; in practice, competition is often reduced by a great variety of limitations, including monopolies. The monopoly, a limit on competition, is an example of market failure. Competition among merchants in foreign trade was common in ancient times, and it has been a characteristic of mercantile and industrial expansion since the Middle Ages. By the 19th century, classical economic theorists had come to regard

Microsoft's stated mission statement is "to help people and businesses throughout the world realize their full potential." Arguably, a statement this vague provides so little sense of mission that it lacks value. That is the point. Microsoft cannot even uphold its own mission internally, given the gap between the company's potential and the company's output. That the company has no coherent, tangible sense of its own mission is a contributing factor to that failure. Consider the company's resources. As Clarke (2010) notes, it is not for lack of ideas that Microsoft has failed to innovate. The company has great people, highly-talented, educated and experienced. It has $66 billion in cash on its balance sheet and another $10 billion in long-term investments (MSN Moneycentral, 2012). Clarke (2010) notes that the company spends $9 billion per year on research and development. The potential for innovation at Microsoft, then, is tremendous, yet its output is minimal.

in the most part, states that Microsoft is truly dismantling the competitive market. IBM and Apple created OS/2 and the Mac OS, respectively. Because of this “barrier of entry,” these top companies have not been able to “compete effectively with

Microsoft is a highly diversified company. Its technologically-related products span from software to music players to game consoles to web browsers to search engines to phones. However, its flagship product, the product which has been the primary driver of its profits has been Microsoft Windows, the ubiquitous operating system that runs on virtually every computer in the world. Windows has been deemed so critical that even Microsoft's competitor Apple was effectively forced by market pressures to allow its Macs to run Windows, in an effort to boost sales. "As astounding as Apple's success has been, it hasn't put a dent in the Microsoft Office monopoly. [Current CEO] Ballmer and company still profit on every Macbook running Word, Excel and PowerPoint" (Greg 2012).But while Microsoft continues to make its highly profitable Windows products (despite industry criticism about its user features); it has struggled to diversify in its many critical areas, most notable in its music, phones, and Internet service.

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.

Considering that every computer manufactured in the United States and the world has to have an operating system in order to work Microsoft appears to be dominant in this arena. The company has been so dominant over the years that back in 1998 in a complaint filed against Microsoft in the U.S. District Court of the District of Columbia on May 18, 1998, the Justice Department declares unequivocally that "Microsoft possesses (and for several years has possessed) monopoly power in the market for personal computer operating systems" (U.S. v. Microsoft Corporation 1998).