FREE ESSAY ON THE MICROSOFT ANTITRUST CASE

THE MICROSOFT ANTITRUST CASE

The Microsoft Antitrust Case
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 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 overall functionality
available to the customer. 
Microsoft began expanding into the browser area because of increasing threat from
Netscape and Java. Java is the programming language used to make Netscape. Programs that
are written in Java can work on any PC, whether it has Windows on it or not. That is why
there is a great threat to the Windows environment. The more Netscape is used, the more
other vendors will begin writing Netscape compliant programs and the more Java will be
used, which puts a damper on Windows. So Windows introduced their Internet explorer to
combat the increasing Netscape usage. It did not do this to create a monopoly, but to
protect itself. If people realize that Java programs can be run on ANY PC, then they will
realize that they do not need to buy Windows. 
Some say that Microsoft began it's "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. PC manufacturers did not hesitate to comply
with Microsoft's new standard because they did not want to lose the ability to
manufacture computers with Windows installed on them, as Windows holds a great market
share and most consumers only buy PC's with Windows already installed on them. It would
be detrimental for a company to refuse compliance of Microsoft's new standard. This is
another complaint of critics. That manufacturers had no other choice but to do what
Microsoft said, out of fear of their own company losing profits. 
Microsoft also "pulls the strings" it has with other ISP's and software companies. There
is a lot of software that is not made by Microsoft that comes with the Windows package.
Some of these include, AOL, Prodigy, AT&T, Quicken, just to name a few. Microsoft gives
these companies and their icons and programs are displayed on the Windows desktop. In
return, these companies must give preferential treatment in promotion and the like to
Microsoft. One example is AOL's new 4.0 browser is specially designed to work best with
the Microsoft Internet Explorer 4.0 browser. Much of the increase in AOL's clientele base
can be attributed to the combined efforts of Microsoft and AOL. 
Microsoft is not only working with ISP's, but also with companies that build and maintain
web pages and servers. Microsoft also gives them preferential treatment through Windows
and in return, they make their web pages to be compliant with the Microsoft browser. Most
web pages even have a little disclaimer that says, "Best viewed with Microsoft IE4.0". In
this way, Microsoft can again hold its position in the browser market. 
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. Microsoft appears to have followed the latter practice. Microsoft
began by giving away products that were identical to what Netscape was selling. While
this would be illegal if Microsoft's expense on these products was great, it is not,
because software production cost is virtually next to nothing. So for Microsoft to offer
software for free is not illegal. 
Though fierce competition does promote technological innovation, Microsoft does use its
monopoly power to establish its dominance in the browser world. Microsoft uses its strong
position with the Windows operating system to "force" PC manufacturers and software
companies to comply with Microsoft's standards. Almost every software company has some
connection to Microsoft. Microsoft uses these connections to make sure that no other
competitors will succeed. Microsoft has countless connections with numerous ISP's,
software companies, server companies, and just about any other company that has something
to do with a computer. Microsoft knows that it has the dominant operating system on the
market right now and every software company, ISP, etc, wants to be part of it. If they
are not, then they are likely to go under. The more and more companies that join
Microsoft, the more and more Microsoft's monopoly power will grow. Pretty soon, Microsoft
will own 100% of the market not only in browsers, but I believe in many other areas, such
as software production and distribution and even what kind of computer, its hardware,
etc, that can run Windows. I do not believe that Microsoft's monopoly agenda solely
contains their "browser war", but that it extends to a much higher scale. 
Bibliography
Works Cited
Web Sites: 
http://www.mindspring.com/~dmataconis/microsoft.htm#Case Resources
http://www.mindspring.com/~dmataconis/sherman.txt
http://www.cnn.com/US/9805/18/federal.complaint/