On May 18, 1998 the United States Department of Justice (DOJ) filed an antitrust law suit against Microsoft CorporationThe facts of the case were such that the DOJ alleged that Microsoft Corporation engaged in unfair monopoly practices by illegally crippling its competition in an attempt to extend its software monopoly within the personal computer market. The allegations indicated that Microsoft’s Chairman, Bill Gates, abused his monopoly power by bundling its internet browser with its operating system software and essentially offering the internet browser free with the purchase of its operating system. This, the DOJ claimed served as a deterrent for the purchase of other internet browser software and adversely affected their sales.
In addition to the bundling of the browser, there was compatibility issues faced when individuals using the Microsoft Windows operating system attempted to utilize the Netscape internet browser. Of course Microsoft claimed that the compatibility issues were inadvertent and not a direct attempt to further extend its monopoly (Wikipedia, n.d.).
The case was tried in the United States District Court and after a very lengthy trial, Judge Jackson issued his findings of facts on the case on November 5, 1999. He found that it was obvious that Microsoft had achieved dominance within the personal computer operating systems market. This dominance, he felt did constitute a monopoly. This in itself did not prove to be detrimental to its competitors but Microsoft took further action to cripple it competitors.
These competitors included Apple, Java, Netscape, Lotus Notes, Real Networks, Linux, and others. Finally, the case was concluded when he issued a two-part ruling on April 3, 2000 when he found Microsoft guilty of monopolization and attempted monopolization. He further ruled that Microsoft must be separated into two independent units—one solely dedicated to the production of the operating system and the other dedication to the production of other software components(Wikipedia, n.d.).
The case of Microsoft’s unfair and illegal monopoly practices did not end with the lawsuit by the DOJ. AOL Time Warner launched a private antitrust case on behalf of Netscape and against Microsoft in January 2002. The allegations were similar to those made by the DOJ in 1998, however, the parties were able to arrive at a settlement before the conclusion of a trial. The settlement was such that Microsoft agreed to pay AOL Time Warner $750 million dollars in addition to issuing a 7 year royalty free license to AOL Time Warner for the use of Internet Explore.
Internet Explorer would then be bundled with the AOL internet subscription package. Another part of the agreement involved collaboration between Netscape and Microsoft to insure inter-compatibility between Microsoft Instant Messenger and Netscape Instant Messenger (Weil & McMillan, 2003).
When one thinks about the antitrust cases against Microsoft one has to contemplate whether Microsoft is operating in the true competitive nature of business in a capitalistic society or whether it is utilizing unfair practices to essentially eliminate its competitors. In the case of Microsoft, I have to say that it is indeed utilizing unfair practices to eliminate its competitors. I feel that in designing its operating system, Microsoft has attempted to eliminate its competitors by making its operating system incompatible with the other internet browsers.
This was not an unintentional act. I feel that this was well intentioned and aimed at creating yet another monopoly. It wasn’t enough for Microsoft to monopolize the PC operating system market but it wanted to do so with the browser market. This is not a practice that was new to Microsoft. Microsoft had utilized monopolizing tactics since its inception. This began with its attempt to replace IBM as a PC operating system monopoly and continues today.
Markoff (1991) delineates an incident wherein Microsoft turned on its then partner, International Business Machines Corporation (IBM). In this instance Microsoft attempted to gain an unfair business advantage by exploiting IBM’s technological innovations and this prompted IBM to respond. The blatant disregard for fair business practices on the part of Microsoft marks one of the inherent problems with monopolies within the United States.
There are very few sanctions against it and at best the offenders are asked to relinquish a small percentage of the proceeds gained through the utility of those practices. I feel that there should be stronger sanctions against those who are found guilty of monopolizing. This would be the only effective means of ending this practice which proves to be detrimental to the core of capitalism.
References
Markoff, J. (1991). I.B.M. Going on Offensive To Promote Key Software. Web.
Weil, N. & McMillan, R. (2003). AOL, Microsoft Settle Netscape Suit: Giants agree to share IE, work on IM Compatibility, fight piracy. Web.
Wikipedia (n.d.). United States v. Microsoft. Web.