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Microsoft’s Anticompetitive Actions

MICROSOFT CASE 6

Microsoft’sAnticompetitive Actions

Outline

  • The section indicates the importance of antitrust laws intended to protect the public from exploitation by monopolies.

  • The case of Microsoft Inc. which intended to suppress other companies such as Netscape browser is indicated.

  • By internalizing their browser in their operating system, Microsoft Inc was abusing its prowess in the software industry by suppressing other technologies.

Body

  • The ruling of the court towards Microsoft is given in this section.

  • In its ruling, the Court established that Microsoft had a monopoly in the market of personal computer operating system that was shielded by the applications barrier to entry.

  • By introducing applications developers APIs that were distinct and independent of the operating system of the Windows, Microsoft had effectively eroded the applications barrier to entry.

  • Microsoft engaged in anticompetitive tactics designed to suppress technological progress and market success of other technologies such as Netscape.

  • The penalties exerted on Microsoft are not sufficient to prevent abuse of monopoly powers in the future

  • The single, most important remedy for the whole society and computer users would be the presence of a favorable environment for innovation.

Conclusion

  • The need for fair competition not only in the technology companies but also in other sectors is indicated in this section.

MicrosoftCase

Thecase brought against Microsoft Inc by the Department of Justice waspegged on the antitrust law that is primarily intended to protect thepublic from exploitation by monopolies. Microsoft efforts to avoidcompetition by suppressing new technologies such as Netscape browserwere pegged on specific agenda, to erect barriers to entry in themarket that the firm commanded a comfortable market share (Bresnahan,2000). Consumers have the right to buy products in the market at aprice that is evenhanded, and that reflects the true cost of theproducts or services. In addition, when market is operatingeffectively and efficiently the consumer has a variety of productavailable (Harmon 1). Monopoly denies consumers a chance to make achoice by preventing entry into market and suppressing competition.By internalizing their browser in their operating system, MicrosoftInc was abusing its prowess in the software industry by suppressingother technologies and as such the Department of Justice hadsufficient grounds to seek legal redress to halt Microsoftanticompetitive antics.

Whetthere is competition in the market of the operating systems, theresult should be a reduction of prices for consumers and improvementof quality of services and products brought to the market. Reductionin prices would lead to the reduction in the extent to whichMicrosoft exploit consumers (Bresnahan, 2000). In its ruling, theCourt established that Microsoft had a monopoly in the market ofpersonal computer operating system that was shielded by theapplications barrier to entry. By introducing applications developersAPIs that were distinct and independent of the operating system ofthe Windows, Microsoft had effectively eroded the applicationsbarrier to entry (Jacobson &amp American Bar Association 5). Mostconspicuously, Netscape’s browser posed a significance threat tothe market share and monopoly of Microsoft’s operating system thatat the time did not have a browser. In reaction to this change inmarket events, Microsoft engaged in anticompetitive tactics designedto suppress technological progress and market success of othertechnologies such as Netscape (Bresnahan, 2000). Such anticompetitiveactivities hurt consumers by denying them the opportunity of choosingthe browser they find appropriate and suitable. Additionally ithampers the market the browser less OS which closes opportunities forthe manufacture of browser less OS Personal Computer. Microsoftactivities also made it extremely difficult for computer users toobtain a competing browser, and to a large this prevented innovationin the software industry (Bresnahan, 2000).

Thepenalties exerted on Microsoft are not sufficient to prevent abuse ofmonopoly powers in the future. First, Microsoft remains a monopoly inthe software industry and as such it has used other methods withinthe brackets of antitrust law to hinder entry of other firms andeliminate competition (Bresnahan, 2000). An out of court settlementmeant that Microsoft did not face full legal burden for itsexploitative activities in the market. The single, most importantremedy for the whole society and computer users would be the presenceof a favorable environment for innovation (Wilcox 1). Applicationdevelopers will not be constrained under the control of monopolists,who are determined to maintain their status quo. Innovation inSoftware development would be of great benefit to the consumers sinceit broadens their options and reduces prices for the products(Advancement of Capitalism 1). Microsoft has managed to remain asuppressing monopoly even after the penalties were imposed on thecompany. Microsoft Inc is under no legal obligation to disseminatecrucial information that can be used by other software developers tosupport their technologies so that they can be applied efficiently onthe Microsoft software.

References

Advancementof Capitalism. FrequentlyAsked Questions onthe Microsoft Antitrust Case.2012.

http://www.capitalismcenter.org/Advocacy/Antitrust/Microsoft/Antitrust_FAQ/

BresnahanF.T. (2000).TheEconomics of the Microsoft Case.Retrieved from:http://dev3.cepr.org/meets/wkcn/6/695/papers/bresnahan.pdf

Harmon,Amy. EconomistsPush for Microsoft Penalties.2002. Web. Available at

http://www.nytimes.com/2002/06/18/technology/18SOFT.html

JonathanM. Jacobson &amp American Bar Association.AntitrustLaw Developments(sixth). American Bar Association, 2007. Print.

Wilcox, Joe. Judgerules Microsoft violated antitrust laws.Available at

http://news.cnet.com/2100-1001-238758.html