Microsoft A Monopoly Essay, Research Paper

Microsoft a Monopoly?

The potential breakup of the Microsoft Corporation is presently one of the most consuming issues in our society. The government has declared Microsoft a monopoly, and could possibly be broken up into three pieces. This has come as a shock to most everyone, because ?Microsoft Windows? is usually the first thing that pops up on almost everyone?s computer when you first turn it on.

The government says that Microsoft has violated the Sherman Antitrust Act of 1890, which is designed to protect customers against businesses that are fixing prices, rigging bids, or allocating customers. They are doing this by giving away their Microsoft Internet Explorer browser in order to keep Netscape from becoming a competitive force, and it is illegal for a company to undercharge their products for the sole purpose of driving their competitors out of business. Microsoft has tied together their web browser with Windows so that people will have both of their products without having to worry about people buying the Netscape Navigator web browser. (Sullivan)

However, Microsoft and Netscape are not the only ones involved in this conflict. America Online, one of the most popular Internet service providers today, is also a major force in this possible outcome. Microsoft agreed to put a link in their Windows system if America Online would use Microsoft Internet Explorer instead of Netscape Navigator as their web browser. This is also a major issue because ?it?s illegal to leverage a monopoly position in one product to force companies to agree to distribute another of the monopoly owner?s products at the expense of the competitor? (Sullivan).

Microsoft argues though, that Windows and Internet Explorer are ?effectively one integrated product? (Sullivan). They also argued that America Online picked them because they had a better product, and that America Online felt that Microsoft Internet Explorer would benefit the customers the most. (Sullivan) Microsoft also argues that Netscape has been the major seller of Internet browsers in the past, which proves that they can sell the product. However, they state, that Netscape is keeping people from major technological advances, because they aren?t as up to date as Microsoft is, and that Netscape?s ?recent slip in market share is the result of that company?s own corporate mistakes and consumer choice, not monopolistic practices? (Sullivan). Bill Gates, Chairman and CEO of Microsoft states:

“?Microsoft’s products are popular because we’ve focused on our customers and innovated to meet their needs,” Gates continued. “In this industry, no company has a guaranteed position. Microsoft has succeeded because we have been guided by the most basic American values: innovation, integrity, serving customers, partnership, quality and giving to the community. We compete vigorously, but fairly?? (Microsoft).

This is not the first time that Microsoft has had run-ins with the government. Back in 1990, Microsoft signed a consent decree with the Justice Department because of the conflict with their partnership with IBM. Microsoft had restrictive agreements with IBM as well as other computer manufacturers, and required them to pay a fee for all the computers they sold without the Microsoft Windows operating system. The case was dropped with the agreement that Microsoft eased up on the agreements with these companies. In 1997, Attorney General Janet Reno suspected that they had violated the agreement, and were still requiring some companies to license and distribute Microsoft Internet Explorer.

The new trial was originally expected to last for several years, but now they are saying that it may go straight to the Supreme Court and be over sometime in the year 2000. If this happens, they will skip the lengthy appeals, and try to get this over as soon as possible because of the upcoming presidential elections. Under the Antitrust Expeding Act, Judge Thomas Penfield Jackson could pass the motion by DOJ to skip the appeals arguing that ??immediate consideration of the Supreme Court is of general public importance?? (Raikow). The lawyer representing the government is David Boies from New York, one of the best antitrust litigators in the United States. (Raikow) In this Supreme Court battle, he will try to work out a settlement, which may cause Microsoft to break up into three parts, possibly Microsoft Windows, Microsoft Internet Explorer, and Microsoft Office, or possibly auction off ?brands? of the company. (Meeks)

The possible dangers of corporate monopolies is great. There are many ethics involved in a large corporation dominating 90% of the market of computer software. If this problem is not stopped it could be a problem for millions of consumers. As a student at Stanford University states: ??allowing a single company control over an indispensable product is clearly problematic. As Windows becomes more and more standardized, computer users’ reliance on it will grow. The elasticity of price will decrease and the user will have no choice but to pay whatever price the company sets?

(Stanford). This is why the government has established laws to prevent this, and has to step in and stop it when it does happen. Yes, Microsoft has many good products, and ultimately people can buy what they want, but Microsoft has done many things to prevent people from buying other products, as well as went around and bended many laws. Right now, Microsoft is probably the most technological of all computer software, but if this monopoly is allowed to stay like it is now, it will dominate everything and consumers won?t have the choice to pick between Microsoft or their other competitors.

This monopoly conflict has not happened since the breakup of AT&T where the employees had to decide whether to stay with the company or work for the newer company, and all the assets had to be split equally among the two companies. Many employees said ??it was the hardest thing that they and the company ever did?? (Meeks) They also stated that it was a ??huge, huge undertaking?? and it caused ?a lot of confusion?? (Meeks). Whatever turns out in this trial is sure to effect millions of computer users and Microsoft employees all over the world. Computers are a big business today and some would have a hard time without this technology, whether it be work, school, finances, or whatever.