The Microsoft Antitrust Case

Posted: December 2nd, 2013

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The Microsoft Antitrust Case

Formation of the antitrust laws began as a way of ending and prohibiting monopolies and trusts. These laws were a way of ensuring fair competition in different industries, which would in turn ensure distribution of wealth. The laws guaranteed entry of many companies within the same industry, and this created a level playing field for the companies, which encouraged competition. Competition guarantees high quality products as different companies fight to increase their market share. The laws ensure that all companies have the same chance of being successful in their businesses. It ensures that no company determines the direction that other companies take. Companies are free to change and market their products and services in the market.

Microsoft is seen as a monopoly because of its control of the personal computer industry. Microsoft’s efficiency and innovativeness ensured that it dominated the computer industry. It developed the windows operating system, as an add-on to the company’s MS-DOS operating system. The graphical nature of the new operating system attracted many people. This led to manufacturers incorporating the operating system into the personal computers, resulting to a market share of over 90%. This meant that almost everyone who owned a PC used the windows operating system. This raised concerns over the market dominance of Microsoft in the industry, and the antitrust tendencies of the company.

The antitrust laws began with the passage of the Sherman Act in 1890. The act prohibited monopolies and outlawed trusts that intended to gain dominance in the market. Even as states create and establish their own antitrust laws, they base their laws and policies on the Sherman Act. Subsequent laws such as contained in the Clayton Antitrust Act and the Robinson-Patman Act followed. They modified the Sherman Act as the country continued to grow, ensuring growth in businesses. The Acts ensured that companies would not be able to fix prices or abuse their power to maintain their monopoly in the market.

The creation of the Federal Trade Commission as a regulatory body ensured that businesses and individuals would enforce the laws. It ensured that companies would not use unfair methods of competition in their business operations. Companies that violate the Sherman Act have committed felonies, and they are liable to pay fines and face a prison sentence. The antitrust laws apply to both individuals and companies, and they prevent consumers and businesses from harm. In light of this, Microsoft violated the antitrust laws by limiting opportunities for other companies in the industries to thrive, and by intending to monopolize the market.

According to section 2 of the Sherman Act, “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…shall be deemed guilty of a felony, and, on a conviction thereof…in the discretion of the court.” The concept of monopoly under the US law is more than owning the largest market share, but it means using anticompetitive measures to get the market share. One cannot accuse a company of monopoly, however large the company is, if the company is competing fairly in the market. Many companies have managed to increase their market share by creating innovative products, which appeal to consumers. They have used effective marketing campaigns that have increased the consumers’ awareness of their products, leading to increased demand of their products, and subsequent market growth. One cannot accuse such companies of being monopolistic or of violating the antitrust laws.

Microsoft controlled the largest share of the market through its operating system, which was present in over 90% of the personal computers. It dominated the PC industry because of its operating system. Any other person or company, which had an interest in developing software and other computer applications, had to ensure that their products were compatible with the windows operating system. They would otherwise have to target a smaller market share of the other companies. Such a monopoly not only limits competition, but it hinders development within the industry because Section 2 of the Sherman Act prohibits companies, which have monopoly power from using means unavailable to consumers to maintain and hold that power.

Section 1 of the Sherman Act prohibits any contract or any attempt of a company to restraint trade. Companies should not use any methods that restrain competitors. Microsoft did not observe the antitrust laws because it limited the chance for competition from other companies. It created its own browser and bundled it to its operating system. By doing this, it limited the chances that other companies with web browsers had of using their browsers with the windows operating system. This was a case of Microsoft abusing its power to limit competition. Many people use Microsoft programs. By tying its web browser to its operating system, other browsing companies would not be able to reach the consumers, most of whom use Windows. This limited the choices available to consumers. It limited the chance of having products that were more innovative in the market.

The antitrust laws benefit the consumers, by ensuring that companies do not use anticompetitive measures to harm them. The decision to limit other browsers from using the windows network would harm the consumers. The consumers would not enjoy the benefits that other browsers had to offer. They had to contend with using Microsoft’s browser, internet explorer. This meant that whenever the browser failed or developed a problem, the users had to wait for the problem to be resolved before they could continue with their work. They had to contend with the limitations and weaknesses of the bundled browser. Ultimately, this would affect work performance. Thus, Microsoft violated the antitrust laws and harmed the consumers in the process.

I would solve the case by examining the conditions and elements of the antitrust laws and policy. In addition, I would consider laws, which ensure consumer protection. The antitrust laws would ensure that I get a clear idea of what the laws mean. I would look at past cases, which have dealt with antitrust issues, and I would examine the decision made by the judges. I would look at the reasoning behind the decision, and any other developments to the case. I would consider both sides of the argument to ensure that I am objective when making decisions. This is because many people are aware of the antitrust laws, and they would not consider violating them since they know they will face legal consequences. I would therefore listen to the defendants to get a clear picture of their defense. In giving my verdict, I would that Microsoft makes it possible for other browsers to use its systems. Antitrust laws ensure that there is fair competition and that all companies have the same opportunity of making it in their respective businesses. It ensures that businesses with large market share do not abuse their power by using anticompetitive means to get a large market share. In addition, the laws ensure that companies do not make contracts that limit competition.

Works Cited

Economides, Nicholas. The Microsoft Antitrust Case: A Case Study for MBA Students. 2003. Web. 27 Nov. 2012