Microsoft Antitrust Case Analysis Study

1571 words - 7 pages

Microsoft Antitrust Case Study AnalysisThe Microsoft Corporation is a worldwide company providing a variety of different software products and services. Microsoft maintains internet sites as well as develops computer hardware and programs. Microsoft is the largest supplier of computer software in the world (Reinhardt, 2006). They are known for products like Windows XP, Microsoft Office and Microsoft Visual Studio.NET. The Microsoft Corporation also provides products and services for governmental agencies and organizations (Reinhardt, 2006). This corporation has thrived on its ability to develop such innovative software and yet has become known for stable and reliable operating systems for ...view middle of the document...

The Justice Department and Microsoft entered a decree of consent which Microsoft agreed to by accepting restrictions to its agreements; however Microsoft continued to claim the Internet Explorer and Operating Systems were products that worked together (Antitrust Issues, 2003).On December 11, 1997, Judge Thomas Penfield ordered Microsoft to offer Internet Explorer and Windows 95 as separate products (Antitrust Issues, 2003). Microsoft had violated the Sherman Act, which clearly states that monopolies are illegal. Microsoft also violated the Clayton Act prohibiting any acts that attempt to restrain competition between companies (Antitrust Issues, 2003). In order for a suit to be brought against Microsoft, the government would have to conduct an initial assessment of Microsoft's marketing power. This assessment would include calculating Microsoft's market share, as well as, the relevant market (Antitrust Issues, 2003).The governmental assessment revealed that the relevant market was Intel-compatible PC operating systems (Antitrust Issues, 2003). According to the government, Microsoft owns ninety percent of the market. Microsoft's argument was that potential competition was the key, which means that the competition was for the market, not within the market. The government also concluded that Microsoft used exclusionary behavior by utilizing contractual agreements (Antitrust Issues, 2003).Main ArgumentsArguments against the CaseIn most cases, acquiring more than one product in a bundle at a low price is a shoppers dream. For Microsoft this selling strategy backfired. The main argument for the Microsoft Antitrust case was that Microsoft had begun its monopoly by bundling Internet Explorer and Microsoft Windows (Legal Affairs, 2001). This bundling of what was considered to be two distinct products is believed to have aided Microsoft in gaining an advantage over the competition. With 90 - 95 percent of American consumers using Windows, there is very little room for companies like Netscape Navigator to have a chance at such a competitor like Microsoft (Policy Debate, n.d.). Microsoft was accused of purposely offering several bundled products like Internet Explorer and media player to eliminate their competition (Legal Affairs, 2001).Arguments for the CaseMicrosoft felt they were providing consumers the best possible products. Their argument against the antitrust case was bundling Internet Explorer or other products with Windows permitted Microsoft to give consumers the best possible product (Policy Debate, n.d.). Microsoft claimed Internet Explorer and Windows is one product (Antitrust Issues, 2003). During one of the numerous cases, legal experts compared the bundling of software to the need for shoes and shoelaces. Consumers will buy extra pairs of shoelaces, but they expect a pair to come with shoes (Reinhardt, 2006). According to Microsoft, modern consumers expect the necessary software to be built into their operating system. Microsoft insists that...

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