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U.S. Vs Microsoft Essay

3650 words - 15 pages

Microsoft Case

Part I:

The government has been looking into Microsoft since 1990, when the Federal Trade Commission first started examining charges of monopolistic behavior. In 1995, Microsoft and the U.S. Justice Department reached a settlement that required the company to change a variety of business practices, including key aspects of its licensing agreements with personal computer makers (2).

Microsoft has grown into an enormous and powerful corporation by a combination of aggressive business practices and having written operating systems (DOS and Windows) for personal computers. From operating systems it branched out into other software which has, along with the operating system, become something of an industry standard. These software products include, but are not limited to, the Microsoft Office Suite and Internet Explorer browser. One of the leading questions is if this is a “good” state of affairs: should one company so dominate computing and the Internet when we rely so heavily upon it?

The most recent lawsuit involves the Justice Department and 20 state attorneys general. They believe that Microsoft has used its monopoly in operating system software to protect its dominance and eliminate competitors. The government says that in the long run, consumers will be harmed, because there will be less competition and fewer choices. More specifically, the government contends that Microsoft has engaged in actions to preserve its Windows monopoly that violate antitrust laws. The government also maintains that the company has used the power of its Windows monopoly to attempt to monopolize the market for Internet browsing software. In addition, government lawyers allege that the company has committed other anti-competitive acts (2).

In addition to the DOJ and the 20 states, several other players are part of the government team against Microsoft: Netscape/AOL, Sun Microsystems, Linux and the Open Source movement, and the Consumer Project on Technology. The keys concerns are illegal tying arrangements with Windows and Internet Explorer; illegal market division between Microsoft and Netscape; and predatory conduct/pricing between Microsoft and Netscape, MS Office and Word Perfect Office and Lotus Office Suite (3).

Microsoft contends that it is simply trying to innovate its products. The company contends that its actions are legal and says that there's no groundswell of consumer indignation over the practices that the government is targeting (3).

The Justice Department and the states contend that Microsoft is violating the Sherman Antitrust Act, which was passed by Congress in 1890. The act has two sections. Section I prohibits certain types of agreements that restrict the flow of trade. Section II prohibits the misuse of monopoly power, namely anti-competitive actions that seek to maintain that monopoly power and actions that attempt to use that monopoly power to dominate another market (2).

The government, for example,...

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