Judge Thomas Penfield Jackson finds that Microsoft is a relentless and predatory monopolist. Judge Jackson says that: Microsoft established and maintained the Windows monopoly by using the "applications barrier to entry," which gives Microsoft enduring monopoly power. Microsoft harnesses independent software vendors to create products that take advantage of new application program interfaces (APIs) built into each release of Windows. Gives PC makers no choice but to install the new operating system, at whatever price Microsoft decrees. Microsoft maintains that it has sought only to innovate, serve customers, and protect its intellectual property. Microsoft says that it is not a monopoly because: It competes with itself by continually releasing "new and improved" versions of Windows. Technological change will ensure that any dominance it enjoys is fragile. Already, "middleware" (applications like RealNetworks) have their own APIs, which new and existing applications might hook on to liberating software developers from the operating system beneath and weakening the applications barrier to entry. Do you think the Court is correct in finding Microsoft a monopoly? Explain. Do you think Microsoft’s counterclaim is correct? Explain Explain what is meant by ‘collusion’ and when it is most likely to occur in an industry.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 2P

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Question 3

Judge Thomas Penfield Jackson finds that Microsoft is a relentless and predatory monopolist.

Judge Jackson says that:

Microsoft established and maintained the Windows monopoly by using the "applications barrier to entry," which gives Microsoft enduring monopoly power.
Microsoft harnesses independent software vendors to create products that take advantage of new application program interfaces (APIs) built into each release of Windows.
Gives PC makers no choice but to install the new operating system, at whatever price Microsoft decrees.

Microsoft maintains that it has sought only to innovate, serve customers, and protect its intellectual property.

Microsoft says that it is not a monopoly because:

It competes with itself by continually releasing "new and improved" versions of Windows.
Technological change will ensure that any dominance it enjoys is fragile.
Already, "middleware" (applications like RealNetworks) have their own APIs, which new and existing applications might hook on to liberating software developers from the operating system beneath and weakening the applications barrier to entry.

Do you think the Court is correct in finding Microsoft a monopoly? Explain.
Do you think Microsoft’s counterclaim is correct? Explain
Explain what is meant by ‘collusion’ and when it is most likely to occur in an industry.
Assuming Microsoft is a monopoly, describe the strategy that the company can implement to increase revenue.
Describe one advantage and one disadvantage of the strategy listed in part (d) above

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