The Microsoft Antitrust Law Suit. Essay, Research Paper
Recently one of the biggest corporations in the United States, Microsoft had to face several ultimatums from the government. The case against Microsoft was brought by 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 software 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 “predatory” actions. Many people feel that Microsoft is only taking advantage of its position in the market and using marketing strategies to attract new customers. They have chosen to implement a market development strategy to attract new customers, who are looking for a system that has Internet capability. Microsoft feels that by integrating their Internet Explorer web browser technology into Windows, they are only improving its functionality available to the customer.
Some people, especially the judge, say that Microsoft began its “illegal” agenda when it began requiring PC manufacturers to sign a license agreement that said that, if they were going to have Windows preinstalled on their new systems, that the Windows Internet Explorer must also be installed. Although it is possible for consumers to install other browsers onto Windows and use them, critics say that Microsoft still has an unfair advantage. It also keeps other browser companies from being able to consult with PC manufacturers to put their browser on the PC from the beginning. When Netscape refused to bow before Microsoft, Microsoft decided to do everything in their power to limit the amount of resources that Netscape could access. Their methods were often compared to those of Andrew Carnegie’s of Carnegie Steel, in the early 1900’s. When a competitor would come into town, he would lower his prices way below cost to drive the competitor out of business. He could afford to do this because he already had the established capital to sustain him. He would just dip into reserves of cash for the time being, and the lowering of prices would not put him out of business. This was deemed illegal and his practice is one of the main reasons that the Sherman Antitrust Act was enacted. According to the Act, no company can engage in monopolistic activities intentionally. If they lowered their prices temporarily to drive out competition, while depending on their cash reserves to hold them over, this would be illegal. But, if they do not lower the price of their products below cost, then their strategy is just a form of true competition.
However, Microsoft has good defense arguments. Microsoft defenders say that the situation should be compared to railroad analogy: Microsoft builds the tracks on which the rest of the industry ships its products and that’s why Microsoft shouldn’t be stopped. With Microsoft creating the standards for the rest of the computer industry, they are able to create better standards and build them much faster than if an outside organization was to create them. With these standards set, other companies are able to create their applications and other products that much faster, and better, and thus the customers receive that much better of a product. However Microsoft still l gets to ride the rails first.
On May 12,2000,Microsoft offered an ultimatum or at least a small step towards the better solution. Microsoft agreed to take off Internet Explorer from “Windows” operating systems. The company said, that it may be a small step from the government point of view, however a big step in company’s opinion. I personally, believe that the government should stay out of the affairs of the economy, rather than get tangled up in a mess and just end up deadlocked like the Federal Trade Commission did in 1990. And even if the government did get involved, due to the extremely fast paced nature of the computer industry, and the extremely slow nature of the government, there may not be any resolve for quite a while. I am one of those people, who think that Microsoft did more good, than illegal, thus not necessitating their breakup, and until the corporation does something terribly wrong my opinion will stay the same.