IBM in the 1980’s
International Business Machine Corporation (IBM) became one and only giant in the field of electronic data processing by the mid 1950’s. IBM had an image of providing superior quality product at a lower price. Its System 360 was perhaps the one reason for lack of trust and misgiving on the part of its rivals and the Federal Government in connection with the business operations of IBM.
Preliminary inquiries were made in mid 1960’s as an antitrust violation by IBM. On Jan 17 1969, the case complaint was filed in US District Court by the Justice Department.
The case alleged that “IBM violated Sec 2 of the Sherman Act by monopolizing or attempting to monopolize the electronic digital computer system market” (IBM antitrust suit records, 1980, Background note, para.2).
There were several charges against IBM by the government and its competitors, such as IBM planned and tried to eliminate all the emerging competitors by abusing monopoly power and devising and executing such business strategies and policies which may be illegal. IBM generally did it by adopting single price policy for its machine, its software and support service and also offering huge discounts to educational institutions whereby there will be demand for IBM product only.
The trial began in May 1975 and spanned over a period of six years. On Jan 8, 1982 Baxter (assistant attorney general in charge of the Antitrust Division) dismissed the case stating that government charges were without merit.
Thus, the IBM case lasted almost 13 years and the point of discussion remains that, Is IBM having monopoly control of the computer industry?
Microsoft in the 1990’s
A civil case was filed against Microsoft on May 18, 1998 by the United State Department of Justice (DoJ) and 20 U.S States. The allegation was that Microsoft abused monopoly power.
Microsoft has developed itself in its chosen area so vast that now Microsoft is providing Internet Exposure (IE) for free with its Intel-based personal computers. This means Microsoft provides the Microsoft window operating system plus web browser free. In a way, it’s helping Microsoft to have a “monopoly” in the computer industry. (Economides, 2001). And the people will also prefer Microsoft only, as its competitors of web browser such as Netscape navigator or Opera are slow to download and have to purchase at physical stores and not online.
There is nothing much the opposition party could do. In Nov 2001 the DoJ reached an agreement to settle the case. According to this covenant, it was necessary that Microsoft share its knowledge and activities with regard to application programs with other parties, in order to comply with local Federal and state laws, and also allow complete entry to Microsoft system, records and secure code for period of five years.
AT&T in the 1970’s
Telecommunication industry in the USA is long dominated by AT&T which is a fully integrated provider of telecommunication services in US. The Bell Operating company provides local exchange services and AT&T provide inter-exchange i.e. longer distance service which makes link to national and international systems.
In the year 1970, Federal communication commission suspected that the AT&T Company was using “monopoly profit” from its western electric subsidiary to subsidize the cost of its network which was contrary to US antitrust law. (Sullivan & Hertz, n.d.).
Thus, a case was filed by The Department of Justice in 1974 and it was settled in 1982 by means of consent decree i.e. Modification of final judgment between AT&T and the DoJ. It was approved that AT&T case settled and the government make end to its charges.
So, the Microsoft case attracted more attention than any other antitrust cases in the history. Both cases of IBM and Microsoft involved bundling (i.e. offering several products for sale as one combined product) and charges of monopoly leveraging (i.e. the use of monopoly power in one market to achieve an advantage in a related market).
In both the cases the facts were different, and the principles of economic analysis led to different outcomes.
Reference
Economides, N. (2001).The Microsoft antitrust case. Web.
IBM antitrust suit records: Background note. (1980). Hagley Museum and Library. 2009. Web.
Sullivan, L A., & Hertz, E. (n.d.). Article: The AT & T antitrust consent decree: Should congress change the rules? 2009. Web.