U.S. vs. Microsoft
Due: November 11, 2006
ÂSuppose only one company made compact disc players. Suppose that same company also produced CDs. What if that company said, "If you want to buy our CD player, you have to buy our CDs as well" (Hayes 1).Â This quote given by Hayes is what the United States said that Microsoft was doing in the computer business. On May 18, 1998, the United States Department of Justice (DOJ) and twenty U.S. states filed suit against the Microsoft Corporation.
The suit charged Microsoft with violating the Sherman Anti-Trust Act. Enacted in 1890, the Sherman Anti-Trust Act Âenshrines competition as a cornerstone of the capitalist economic system. The idea is that if companies have to compete with each other, they will be forced to offer the best products at the lowest possible prices to attract customers (Hayes 1).Â The courts declared that Microsoft abused monopoly power in handling operating systems and web browser sales. A monopoly is defined as Âa persistent market situation where there is only one provider of a product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods (Wikipedia 1).Â Ninety percent of all of the personal computers (PCs) in the world use MicrosoftÂs Windows operating system. ÂThe government claims that Microsoft is using Windows' dominance to gain unfair advantage in another business--providing access to the Internet, the giant network that links the world's computers (Hayes 1).Â The main issue in the case was whether or not Microsoft was allowed to combine its Internet Explorer with its Microsoft Windows operating system.
ÂThe trial started in May 1998 with the US Justice Department and the Attorneys General of twenty US states suing Microsoft for illegally thwarting competition in order to protect and extend its software monopoly. Later, in October the US Justice Department also sued Microsoft for violating a 1994 consent decree by forcing computer makers to include its Internet browser as a part of the installation of Windows software (Wikipedia 1).Â According to the trial, Microsoft told computer manufacturers who wanted to install Windows on their machines that they could only do so if they agreed to install Microsoft's browser as well. The government stated that this strategy allowed Microsoft to acquire an additional thirty-nine percent of Internet users, taking away customers from other browsers such as Netscape. Bill Gates, CEO of Microsoft, stuck to his convictions as he stated that his company did not have a monopoly and that including MicrosoftÂs browser with Windows at no charge was a great deal for customers. According to Microsoft, ÂThe software industry changes so rapidly that even a 90 percent share of the market can disappear overnight. All it takes is a smart competitor with a better idea (Hayes 1).Â
Hayes, Susan. "The U.S. Versus Microsoft (antitrust lawsuit)." 02/08/1999. Scholastic Update. 8 Dec 2006 http://www.accessmylibrary.com/coms2/summary_0286-9327708_ITM.
"United States V. Microsoft." Wikipedia. 12/01/2006. 8 Dec 2006 http://en.wikipedia.org/wiki/United_States_v._Microsoft.
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Jennifer D. Guyer *This typed name serves as my signature.