VII. Current Status and Discussion
I have included some excerpts from the court’s April 2000 findings in the ruling against Microsoft. The conclusions show undoubtedly, that Microsoft acted with deliberate intent to harm its competitors.
Viewing Microsoft’s conduct as a whole also reinforces the conviction that it was predacious. Microsoft paid vast sums of money, and renounced many millions more in lost revenue every year, in order to induce firms to take actions that would help enhance Internet Explorer’s share of browser usage at Navigator’s expense. These outlays cannot be explained as subventions to maximize return from Internet Explorer. Microsoft has no intention of ever charging for licenses to use or distribute its browser. Moreover, neither the desire to bolster demand for Windows nor the prospect of ancillary revenues from Internet Explorer can explain the lengths to which Microsoft has gone. In fact, Microsoft has expended wealth and foresworn opportunities to realize more in a manner and to an extent that can only represent a rational investment if its purpose was to perpetuate the applications barrier to entry. Because Microsoft’s business practices “would not be considered profit maximizing except for the expectation that … the entry of potential rivals” into the market for Intel-compatible PC operating systems will be “blocked or delayed,” Microsoft’s campaign must be termed predatory. Since the Court has already found that Microsoft possesses monopoly power, the predatory nature of the firm’s conduct compels the Court to hold Microsoft liable under ? 2 of the Sherman Act.
In this case, Microsoft early on recognized middleware as the Trojan horse that, once having, in effect, infiltrated the applications barrier, could enable rival operating systems to enter the market for Intel-compatible PC operating systems unimpeded. Simply put, middleware threatened to demolish Microsoft’s coveted monopoly power. Alerted to the threat, Microsoft strove over a period of approximately four years to prevent middleware technologies from fostering the development of enough full-featured, cross-platform applications to erode the applications barrier. In pursuit of this goal, Microsoft sought to convince developers to concentrate on Windows-specific APIs and ignore interfaces exposed by the two incarnations of middleware that posed the greatest threat, namely Netscape’s Navigator Web browser and Sun’s implementation of the Java technology. Microsoft’s campaign succeeded in preventing – for several years, and perhaps permanently – Navigator and Java from fulfilling their potential to open the market for Intel-compatible PC operating systems to competition on the merits. Because Microsoft achieved this result through exclusionary acts that lacked procompetitive justification, the Court deems Microsoft’s conduct the maintenance of monopoly power by anticompetitive means.
Microsoft has shown the courts and indeed the world, time and time again that they (think) are impervious to the laws that govern other firms. They continue to have their hand slapped and then it’s back to the old standard of whip out the checkbook, pay the fine, and on to the next business to be crushed, or the next laws to be violated. Microsoft thinks they are so powerful already that they are above the law. The government is now more than ever convinced that the only way to get Microsoft’s attention and possibly putting an end to their unlawful practices, is to play rough with them. This means sticking by their proposal and convincing the judge to impose it. In the 70 page brief filed, the DOJ stated that they believe that breaking up the company is the only way to prevent Microsoft from continuing with their anticompetitive behavior.
It is likely that the all-conclusive final ruling will end up somewhere in between the government’s extreme proposal of splitting the company and MS’s proposed spanking, but followers of the case and analysts alike believe that the final remedy judgment will lean more toward the government’s side than Microsoft’s. Of course, Microsoft will surely appeal again and again.
It is not likely that Microsoft will get off so easily this time and it is their just due since they cannot be trusted to keep their word. Once again, using their strength and power to bully their way into other market segments, with their introduction of Windows 2000?, Microsoft has included other software that will only run if the user purchases one version of Windows 2000 for their desktop and yet another for their server that runs their network. Microsoft will deny that they are abusing their position of course, as they have in the past, but Federal and State “trustbusters” believe differently.
In the midst of all the chaos of trial and government rulings, Microsoft has still pushed forward with yet another package into yet another market they wish to conquer and dominate. They have continuously maintained that they are not bullying their way into other markets by means of their monopolistic strength, but merely providing the world with better tools with which to do their jobs. What is wrong with this? Depending on how you view their statements, there could be plenty wrong with this type of actions. Microsoft continues to make falsiloquiums. The definition of a falsiloquium is a false statement, when the purpose of the statement is to hide from the receiver what is truly on one’s mind and the receiver can safely assume that this is indeed the purpose of the statement. Microsoft will continue to assert that they are not abusing their position of power, yet still be fully aware that everyone knows that they [Microsoft] know they are.
The case is now currently (slightly) delayed and the conduct remedies previously put in place by Judge Jackson are stayed until heard by a higher court. The conduct changes were originally slated to be put in place on September 5, 2000, so Microsoft has indeed received a bit of reprieve. For now.
Microsoft would have preferred that the case be sent directly to the appellate court, where it has previously enjoyed successes, but it is also not unhappy by the surprising stay of the restrictions. It has given them some room to breathe. Hopefully, they won’t take advantage of it this time.
VIII. Recommendations
The obvious recommendations in this case are all the considerations, fair play, and non-aggressive marketing of their products that Microsoft chose not to employ over the past five years. I have said this repeatedly throughout the paper; if Microsoft had intended to actually do some of the “nice play” techniques that they have now volunteered to do, maybe they wouldn’t be in this mess. All other corporations should take heed; if indeed the courts are making a statement by taking on Microsoft, then it is for a reason. If others want to avoid this type of determined pursuit from the government and their angry competitors, they should obey and pay close attention to the rules of the Sherman Act.
The Sherman Act was put in place in 1890 to prevent people and businesses from becoming monopolistic and practicing unfair trade and methods of competition. The Sherman Act is also the only antitrust act that grants criminal penalties. This means that corporations could be fined up to $10 million per violation and individuals can be fined up to $350,000 per violation plus up to three years in prison. The reason that the penalties are so harsh is because the necessary element for criminal liability under the Sherman Antitrust Act is intent. Microsoft did have intent to practice unfair competition. Microsoft did have intent in all of its unlawful conduct and in its business contract relationships.
The biggest question is not whether or not Microsoft can sustain the split up of the company, but whether the world will then end up with two mini-monopolies. The proposed division will still allow both companies (maybe more) to go forward with their objectives, still make profit, and continue to expand in their markets. The breakup, however, would still leave consumers with an operating-systems monopoly and an applications monopoly that could very well lead to double marginalization, meaning that we might have a substantial software mark-up on both sides.
This will be the challenge that the courts have in enforcing the antitrust law and using this case to control Microsoft. If they can still push forward with the proposed split of the company with all the conduct remedies in place, Microsoft will be forced to comply and modify their methods of doing business. They will not be able to merge or form any joint ventures with each other. Independent boards of directors for the two companies will have to be conceived and kept separate. The original government request was that the terms of the breakup plan be for a term of not less than ten years; if they can enforce it, maybe Microsoft will learn to change its ways.
With the split, the two or more emerging companies will need to follow the outlines of their restrictions very carefully, so as not to violate the court ruling, but also to be able to go forward as separate companies and be able to meet their objectives. They will be watched, not just by the court system, but by the entire world to see if they can pull through this drastic measure that needs to be taken in controlling the unfair competition. Each company will need to avoid all attempts and conspiracies to monopolize, restrain trade, or practice any type of predatory or exclusionary acts in their dealings with competitors and distributors.
The bottom line is that companies such as Microsoft nurture government involvement and regulation enforcement in businesses by their continued aggressive behavior and thus make it worse for other corporations. Microsoft needs more than just their wrist slapped this time, they need to be put on an extremely tight leash and if that means splitting them up and forcing the two to compete against each other, then let the games begin.
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