Government Regulation Of The Microsoft Corporation

1744 words - 7 pages

Government Regulation of the Microsoft Corporation

Does the government have the right to regulate large corporations, namely the Microsoft Corporation? If so, then to what extent can the government do so? Based on our research, it is the government’s responsibility to remedy Microsoft’s noncompetitive behavior in order to increase fair competition.

The Microsoft vs. the Government trial has many possible outcomes, which may affect a specific party. Not only does the outcome affect the Microsoft Corporation, but it also affects the rival companies and the consumer. Though not as eminent, the outcomes may also affect the future decisions against any other companies, possibly committing the same violations as Microsoft.

The Sherman Act was the first law that allowed the federal government to regulate interstate commerce. Sections 1 and 2 define a monopoly or trust power and recommend appropriate punishments including jail time, fines, and considers such infringement to be felonies (Encyclopedia.com). In 1999 and early 2002 The DC Circuit court ruled that Microsoft was a monopolist violating sections 1 and 2 of the Sherman Act of 1890, and Microsoft should be split into two companies. The Court of Appeals demanded a settlement be reached. The conditions of the settlement called for Microsoft to be split into two companies, and to stop all anti competitive techniques. For many this decision was not a remedy as Microsoft was allowed to made sure that it complied with the settlement, and Microsoft is charging to much for licensing fees for middleware to seamlessly interact with windows. The State of Massachusetts and many other companies are still trying to further prosecute and push for harsher action (“Antitrust Litigation Reporter”).

Officials have found that Microsoft “enjoys monopoly power” and they have
concluded this because of three facts: 1. “Microsoft’s share of the market for Intel-compatible PC operating systems is extremely large and stable,” 2. “Microsoft’s dominant market share is protected by a high barrier of entry,” 3. “Microsoft’s
customers lack a commercially viable alternative to Windows” (“Microsoft: Court’s Findings of Fact”). The barrier of entry would “prevent an aspiring entrant into the relevant market from drawing a significant number of customers away from a
dominant incumbent even if the incumbent priced its products substantially above competitive levels for a significant period of time” (“Microsoft: Court’s Findings…). Obviously, the rival companies such as, IBM and Apple, have found great fact, that
in the most part, states that Microsoft is truly dismantling the competitive market. IBM and Apple created OS/2 and the Mac OS, respectively. Because of this “barrier of entry,” these top companies have not been able to “compete effectively with
Windows” (“Microsoft: Court’s…). Microsoft implies that there still is competition; such as Mac OS, Linux, and other operating systems. ...

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