This paper will show that Microsoft Corporation breached the terms of ethical business practice. It did this through unfair and brutal competitive practices that forced its competition to be unfairly beaten. By using the monopoly power it yielded, the company exploited its position and used this advantage illegally. The paper will show you how this happened and discuss why the practices shown are unethical. Additionally, it will show the effects of the unethical practices on the general economy.
Microsoft is undoubtedly the world’s biggest software company. Its size makes it a formidable force for any competitor who dares venture into its business territory. A firm of such status, and any other firm for that matter, would strive to keep this dominance in place. However, the nature of its industry requires it to constantly innovate and invest in new products and technologies (Purkayastha, 1999, 946). The company’s financial strength allows it to put a lot in innovation and research in order to stay ahead of the competition. However, its true power lay not in its finances, but its platform monopoly (Spinello, 2005, 343). The platform here would refer to its operating system. Since it has a monopoly in controlling the system, it can lock out competition by manipulating this unique advantage. This is where antitrust law steps in.
Antitrust laws are laws that are aimed at keeping the markets competitive and not dominated by monopolistic forces (Allbusiness.com, 1999). They are not meant to destroy competition, but keep competition alive by making sure that forces that would destroy it are controlled (Gillmor, 2002, 58). According to Hemphill (2004), this allows the economy to have sustainable and desirable activities (p. 128). So how did Microsoft breach ethics?
The first accusation leveled is that Microsoft instituted a barrier to entry, especially about the browser market (Spinello, 2005, 347). This is because the company refused to divulge its source code. This ensured that software companies that offered software products that would run on the Windows platform would be unsure of its compatibility and quality. Netscape’s Navigator was a casualty of this tactic. They were unable to ensure that the product run seamlessly with Windows while Microsoft optimized Internet Explorer (IE), its own web browser, for Windows (George, 2003, 183). Additionally, Microsoft turned into a bully, using its size to force computer manufacturers into exclusionary deals (Purkayastha, 199, 946). The manufacturers were forced to license a copy of Windows with every computer they produced, but the IE icon on the desktop and were expressly forbidden from putting competitor’s software icons on the desktop (Spinello, 2005, 348; Purkayastha, 199, 947 ). This promotional greatly hindered the competition.
They also obtained exclusionary deals with Internet Access Providers to use IE as their default browser in exchange for the position of home page (Spinello, 2005, 348). In addition, they practiced bundling Windows with IE (George, 2003, 183; Purkayastha, 1999, 947). This practice resulted in the reduction of choice for consumers.
However, in my opinion, it is the Java war that really brought out the ugliness of Microsoft’s tactics. Sun Microsystems developed a cross-platform programming language called Java. Its function was to provide a standard programming language across multiple platforms (Spinello, 2005, 346). Microsoft saw this as a threat to its platform dominance and sought to end it brutally. It created its own version of Java while simultaneously making Sun’s Java incompatible with Windows (Spinello, 2005, 347). Additionally, it entered agreements with Independent Software Vendors (ISVs) to provide them with technical information in exchange for exclusive use and promotion of Microsoft’s Java.
These competitive tactics applied by Microsoft were not only illegal, but were also grossly unethical. Unethical behavior here is determined with respect to the consumer and the economy as a whole.
In examining how this affects the consumer, we must look at the effects in long-term. Microsoft sought to retain its leading position by making the cost of their browser zero. By bundling the product with Windows, it allowed the consumer to obtain this software at no extra cost (Purkayastha, 199, 947). This is only beneficial to the consumer in the short run. In the long run, with competition dead, the company would so easily be able to increase its price since competition no longer exists.
However, apart from price, the major consumer concern is quality. It is common knowledge that competition breeds quality. This is why the antitrust laws exist in the first place, to preserve competition; so as to preserve quality by extension. In the market segment such as IT, quality would encompass the traditional meaning of quality and innovation (Hemphill, 2004, 133). Microsoft’s unfair business techniques mean that the competition is stifled and therefore innovation is slowed. If companies such as Sun Microsystems cannot create a financially viable product such as Java, then the creativity is stalled. The immorality of stifling creativity is that the customer in the end loses out.
What is needed is there to be a leveling out of the playing field. A level playing field means that one does not take unfair advantage of one’s position in order to defeat competition (Hemphill, 2004, 130). The firm is judged on the basis of the quality and innovativeness of its products, not the strength it can muster to stave the competition.
In summary, in the end, the customer loses out in terms of price, quality and innovation. The unethical practice Microsoft undertook was to use illegal and unfair practices to kill off competition to maintain its dominant position (Purkayastha, 199, 947). By instituting checks and balances to maintain positive competition, we benefit the market. Therefore, competitive ethics are not observed to the advantage of the firm, but rather to the advantage of the consumer and the whole market in total.
References
Antitrust Law. (1999). Allbusiness.com. Web.
De George, R. (2003). The Ethics of Information Technology and Business (Illustrated., pp. 181-184). Wiley-Blackwell.
Gillmor, S. (2002). Law and Order: Marrying the spirit to the letter of the law produces a victory for Microsoft customers, if not for competitors. InfoWorld, 24(45), 58.
Hemphill, T. (2004). Antitrust, Dynamic Competition and Business Ethics. Journal of Business Ethics, 50(2), 127-135.
Purkayastha, P. (1999). Bill Gates in the Dock: Anti-Trust Case against Microsoft. Economics and Political Weekly, 34(16/17), 946-947.
Spinnello, R. A. (2005). Competing Fairly in the New Economy: Lessons from the Browser Wars. Journal of Business Ethics, 57(4), 343-364.
Annotated Bibliography
Antitrust Law. (1999). Allbusiness.com. Web.
The article gives a brief introduction and definition to the concept of antitrust laws. It gives a general introduction to the concept, showing the law it comes from and how it is legally defined. This allows the reader who has no previous knowledge of this concept to gain a working understanding of the same. In short, the function of this article is to introduce. However, the page it is found on has a follow-up article on the Microsoft antitrust case. This gives the reader a real-life application of this law.
De George, R. (2003). The Ethics of Information Technology and Business (Illustrated., pp. 181-184). Wiley-Blackwell.
As the title suggests, this book offers a wide-ranged discussion on ethics and the business world involved in IT. The issues presented in this book cover a wide array of ethical subjects. Issues discussed range from privacy, intellectual property, censorship and numerous business issues in the IT world. This overview is good for individuals interested in general ethical issues in IT. The book is highly informative and allows one to create a relationship between ethics and IT. The author is a Professor of Philosophy and Business administration. He has published widely and is an acclaimed academic in the field of ethics. His academic standing makes his work authoritative and therefore credible.
Gillmor, S. (2002). Law and Order: Marrying the spirit to the letter of the law produces a victory for Microsoft customers, if not for competitors. InfoWorld, 24(45), 58.
This article gives a more legal edge to the case. It provides a summary of the legal judgment while giving the various winners and losers of the case. It essentially breaks the case into three parts, based on the judgment. Additionally, it provides insights and comments from various stakeholders involved in the case. This article is very useful for providing a quick and summarized view of the case. The writer of the article holds the position of director in the InfoWorld Test Center. His authority and reputation, derived from the title he holds, assures us of the credibility of the article.
Hemphill, T. (2004). Antitrust, Dynamic Competition and Business Ethics. Journal of Business Ethics, 50(2), 127-135.
The article provides a theoretical background to anti-trust in general. It assumes one to already be generally familiarized with anti-trust. It delves into several perspectives of the same: its economics, legality and ethic. The advantage of this article is that it looks at this issue from several industries’ perspectives, giving plenty of examples of how antitrust is applied. The bringing together of ethical, economical and legal perspectives gives a wholesome picture, allowing us to trace the inter-relation between these fields as far as antitrust is concerned. The content is well-cited, making liberal use of scholarly material. Additionally, the article is in a peer-reviewed journal, making the content credible.
Purkayastha, P. (1999). Bill Gates in the Dock: Anti-Trust Case against Microsoft. Economics and Political Weekly, 34(16/17), 946-947.
This short publication cites gives a concise outline of the anti-trust case background. The article is writer is Indian and therefore writes from an international perspective. It starts off by citing the importance of the case before delving into a timeline structure of the facts of the case. This allows one to see short, accurate yet somewhat detailed report of the main facts of the case. The source of the article is a peer-reviewed journal, allowing us to rest assured that the content is genuine and academically sound.
Spinnello, R. A. (2005). Competing Fairly in the New Economy: Lessons from the Browser Wars. Journal of Business Ethics, 57(4), 343-364.
Spinello provides a multi-dimensional perspective of several ethical issues raised during the browser wars. It is arranged in an incident-based format. In this format, the various incidents are listed and the moral issues and obligations arising are argued in the segment. The main aim of the article is to provide an argument; however, it still gives a concise chronology of events that raised the moral obligations. The article includes charts and graphs, providing information in a clearer format. The use of credible academic citing and the fact that it is in a peer-reviewed journal allows us to judge the content as credible and authoritative.