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Microsoft Antitrust Trial: Argument For Both Sides

2278 words - 9 pages

The Government's PositionIn May of 1998 the United States Department of Justice (USDOJ) was joined by 20 States and the District of Columbia in a lawsuit naming Microsoft as the defendant. There were four allegations levied against Microsoft, all of which were violations of the Sherman Antitrust Act.Violations of Section 2 of the Sherman Antitrust Act.1. Illegally monopolizing the Personal Computer Operating Systems Market.2. Making contractual agreements with manufacturers of related goods and services to not compete with Microsoft in an effort to maintain and enhance it's monopoly.3. Attempting to illegally monopolize the Internet Browser MarketViolations of Section 1 of the Sherman Antitrust Act.4. Illegally bundling Microsoft Internet Browser and Internet Explorer with Microsoft Windows Operating System in a manner that limits competition.Section 2 of the Sherman Antitrust Act states:"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony."The USDOJ et alia sustain that Microsoft:1. Engaged in predatory and anti-competitive actions with the specific intent to monopolize.2. Had a dangerously high probability of achieving monopoly power3. Acted to acquire, preserve and enhance its monopoly.Section 1 of the Sherman Antitrust Act states:"Every contract, combination in the form of trust or otherwise, or conspiracy, inrestraint of trade or commerce among the several States, or with foreign nations,is declared to be illegal."It is also the position of the USDOJ et alia that Microsoft:1. created a situation in which consumers were being harmed or could be harmed bya. Direct lose from high pricesb. Limited choice of varietyc. Retardation of the innovation process.In monopolizing the Operating System Market, Microsoft took advantage of its relationship with Independent Software Vendors to get MS Windows positioned as the Operating System of choice for Intel-compatible CPU's. This created a situation in which very few applications were written to run on other Operating Systems. Thereby limiting the number of close substitutes for Windows in the OS market.Microsoft also enjoyed the protection offered by the significant Barrier to Entry that existed in the Operating System market. Competing firms would have had to invest a very large sum of money to get into the market while Microsoft's marginal costs to stay in the market were relatively small.Further attempts to create and hold a monopoly in the market are evidenced by the price control that Microsoft had on the operating system market. Microsoft intentionally kept its OS product price low and made up the difference in the price of other Windows compatible applications.Microsoft's PositionA monopoly is defined as a persistent market situation where there is only one provider of a kind of product or service...

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