Microsoft Monopoly Essay, Research Paper

In 1994 Microsoft decided to get into the financial software system by attempting to be a central player in the mix of the software business. Bill Gates decided that the financial system would be where Microsoft would make their money. Employees of Microsoft set out with a great attitude to take control of the suddenly emerging electronic bank field. (Intuit Microsoft merger void Internet source) Intuit s Quicken software dominated the electronic banking field, controlling seventy percent of the finance software market. Microsoft finished a dismal second behind Intuit s software. Bill Gates quest to control the electronic banking field was becoming harder and harder. Intuit continued to get larger with a base of over seven million software customers. Soon Intuit launched Intellicharge Visa Credit Card, which gave Intuit almost 300,000 bank customers who were paying bills electronically. Intuits software engineers came up with many electronic billing software, teller machines, and other hot in demand software. Microsoft made an attempt to purchase Intuit software for 1.5 billion dollars a figure that would make it to 2 billion. Merging with Intuit software would buy Microsoft its way into the electronic bank world. After the deal was announced Microsoft offered to sell Novell Corporation Microsoft Money to keep the Department of Justice off their back. Sure enough the Department of Justice stepped in with reasons why the two software companies should not merge. Microsoft would just add to the already top software Quicken and would lessen the value of Microsoft Money. Selling Microsoft Money and merging with Intuit Software would be a win-win situation for Microsoft. Department of Justice also argued that Quicken in the hands of Microsoft would be too powerful for any new competitors ready to join the technology world. (Intuit Microsoft merger void internet source) Microsoft also wanted to come out with Microsoft Network to be tied into the Windows 1995 operating system. If the financial system was tied in with both the operating system and the new online service, the fast growing Microsoft Software would have demolished many competitors. This fight between the Department of Justice and Microsoft was just a small hint of what was to come and the latest Microsoft court case. (Intuit Microsoft merger void internet source) Soon after the Department of Justice decided to intervene in the Microsoft and Intuit merger, Microsoft dropped its offer to merge for 2 billion dollars. These steps were taken to avoid a long and costly court battle with the Department of Justice. (Intuit Microsoft merger void internet source) November 5, 1999, nearly four years after the Intuit and Microsoft merger was voided, a federal judge ruled Microsoft a monopoly. Microsoft controlling the personal computer operating systems was declared a monopoly. This ruling gave the Government a victory in the anti-trust suit against Microsoft. The only defense filed on Microsoft s behalf was that Microsoft s actions have not hurt the consumer. Thomas Penfield Jackson, the U.S. District Judge, said no to the defense plea of Microsoft. (Microsoft ruled a Monopoly internet source)

There were three major issues pointed out by Thomas Penfield Jackson, the U. S. District Judge. 1. Microsoft s share of the market for intel-compatible personal computer (PC) operating systems is extremely large and stable. 2. Second, Microsoft s dominant market share is protected by a high barrier to entry 3. Microsoft s customers lack a commercially viable alternative to Windows these remarks stated by Thomas Pennfield Jackson during the court hearing they were written by John Fredrick Moore(Microsoft Ruled a Monopoly internet source)A major problem is that software that would benefit a consumer would not coincide with Microsoft Windows. Microsoft is said to have been monopolistic and abusive of their own powers, because their actions were preventing software innovations to be made which in turn would help out the consumer. Microsoft officials remained confident in the start of the ruling. They considered that the findings would be found legal in the end. Microsoft believes they did not at all try to harm the consumer but to help the consumer make life easier. Also Microsoft allegedly put small companies out of business creating less jobs for hard working Americans. Microsoft countered that argument by claiming Sun Microsystems Incorporated and Oracle Corporation along with hand held technology companies have an even chance of competition. (Microsoft is a Monopoly internet source) Bill Gates addressed the public with a speech declaring that Microsoft may try to make a settlement with the Department of Justice before there is a verdict read. The day the monopoly findings were made public the Microsoft stock dropped nearly five pints in after hour trade. (Time March 22, 1999) The major set back for Microsoft was Windows 98 and the inability for a user to choose another web browser. The problem did not allow operators of Personal Computers to browse the web with the web browser of their personal choice. Windows 98 does not allow a person to surf the net on any other browser, than the one controlled by Microsoft. Microsoft claimed that the browser was an integrated part of the operating system. The only problem was that there is no logical reason to lock a browser into windows and the browser couldn t even be removed if the owner chose to. Microsoft also used restrictive licensing agreements that would prevent PC makers from installing other browsers on the computer. This is a foreclosure of distribution noted in the anti-trust law. (Business Week February 22, 1999) According to U.S. District Judge Thomas Penfield Microsoft is a monopolist and it engaged in massive anti competitive practices that harmed innovation and limited consumer choice. ( Time Nov 15, 1999) Microsoft gained its power by launching Windows 98. It used that desktop software to prevent the use of other browsers, which is very hurtful to the consumers. Microsoft tried to shut its leading competitor out of business by forcing consumers to use Microsoft s Web Browser on their computer thorough windows 98. Microsoft made and effort to eliminate all competitors and take total control of Web Browsers by use of only one.