Antitrust Case of Microsoft

The government's case against Microsoft for trying to monopolize the personal
computer market

Leading provider of computer software worldwide, Microsoft (MS) is

renownedfor being the most valuable corporation in the world. Actually,
Microsoft has completely changed operating systems (OS) for personal
computers (PCs). Microsoft offers a range of goods such as operating systems,
personal computers, software applications, interactive media, internet platforms,
client environment apps, and specialized tools inside operating software. MS
has established itself during the past 20 years, with a market capitalization of
more than $500 billion.With the release of its "MS Office" program in 1995,
Microsoft gained notorietyand eventually gained a monopoly with over 90% of
the market.It also held a substantial market share in server operating systems
and internet browsers.

The software corporation was charged with antitrust by the Justice Department.
The accusations arose as a result of Microsoft adding extra apps to its operating
system. It meant that purchasing the Microsoft Windows operating system was
a must for clients who wished to use a certain Microsoft program.

Furthermore, Microsoft gave away free copies of their Internet Explorer

browser to customers. It resulted in a concentration of market share and the
ultimate demise of Netscape, which at the time was the company's main rival.
According to the DoJ lawsuit, Microsoft purposefully made it very difficult for
customers to install third-party software on desktop computers that were
powered by its operating system
 SUMMERY OF CASE

 Microsoft was sued by the US government in the 1990s for attempting to

monopolize the personal computer industry.

 Sections of the Sherman Antitrust Act, which comprised regulations

created by governments to guarantee fair competition in the market, were
the subject of the charges made against the corporation.

 Judge Thomas Penfield Jackson of the District Court found that the
business had broken several Sherman Antitrust Act provisions.
 WHAT ARE ANTITRUST LAWS ?
Governments create antitrust laws to guarantee fair competition in the market.
The laws forbid actions that raise obstacles to entry and have a detrimental
effect on open markets. Predatory pricing used to preserve monopolistic control,
corporate mergers that are anti-competitive, industry-wide price-fixing, etc. are
typical instances of such tactics.

Protecting consumers from the negative effects of market monopolies is the

main goal of antitrust legislation. The negative effects typically manifest as
increased costs for consumers of products and services. Many businesses
attempt to avoid legal responsibilities by becoming market leaders and
monopolies by acquisitions of rival businesses or extermination.

The Sherman Antitrust Act of 1890 established antitrust laws in the United
States. It was historic laws that prohibited cartels, trusts, etc.

Department of Justice (DOJ), USA started investigating in the monopoly

practices alleged to have been followed by MS that is, compelling PC makers to
incorporate to its internet browser which are provided free with “Windows 95”.
Assistant Attorney General for antitrust remarked that “this kind of product-
forcing is an abuse of monopoly power and we seek to put an end to it.” The
legal battle between MS and DOJ started in 1997. DOJ alleged that MS is arm
twisting to include internet explorer web browser with its Windows 95 OS.

During the investigation DOJ collected relevant documents from MS

in one of the exchange of e-mails an employee had written “strategic objective
was to kill cross-platform Java.” One more engineer had noted “Screw Sun ….
steel the Java language.” It was found that MS had created its own version of
Java which fitted on Windows platform. DOJ collected evidences, witnesses
and built its case how MS used its financial strength and monopoly position.
The Judgement of the US District Court came in June 2000. The judgement was
that MS violated US antitrust laws and abused its monopoly power in computer
OS the judge based is judgement on MS share in OS which was very high, high
entry barriers created by MS and hence the customer had no alternatives but to
follow what MS gave. The judge ordered that MS be split into two smaller
companies one for Windows OS and the other for Internet business. The judge
also insisted that MS should not violate antitrust laws.

The Case in Law

Microsoft was formally accused of creating a market monopoly by making it
difficult for customers to remove the company's Internet Explorer browser and
by making it difficult for them to install competing software.

The business contended that because products like Macintosh, Unix, and others
were available, customers had freedom of choice and that these tactics were
non-coercive. The authorities also discovered that the corporation was
endangering software sector innovation by suppressing competition.
Additionally, the business was compelled to give its data to other outside
organizations.

Microsoft expressed strong disapproval of the decision and claimed that the
prosecution had a bias.
 SOLUTIONS

Breaking Up Big Tech

The government also ruled that the company should be divided into two, thus
creating two separate entities. One would be solely for the Windows operating
system, while the other entity would be responsible for all other software
products offered by Microsoft.

The ruling was challenged by Microsoft, and an appeals court overturned the
ruling. However, it did successfully set a precedent that is echoed in calls for
breaking up big tech among progressive American politicians. For example,
many lawmakers suggest that Amazon should be divided into two separate
entities, one for e-commerce and the other for the Amazon Web System.

Antitrust Laws of USA:

USA encourages free and fair business which has healthy competition

and vigorous rivalry in the market place so that the consumer gets best

value for its money. No company should have monopolistic powers.

Antitrust policies have two approaches:

(i) The price and other market dealings which restrain the competitive

forces in the market should be prohibited.

(ii) The monopoly market structure be avoided.

US legislations like Sherman Act (1890), the Clayton Act (1914) and the
Federal Trade Commission Act (1914) constitute the backbone of

antitrust laws. Supreme Court in its judgement in September 2000, did

not agree with propose of the government to break up the MS to stop

monopoly practices.

MS is likely to prolong the legal battle and introduced new products in

the market to keep its monopoly. DOJ advised MS in September 2001

to restrict MS on their monopolistic tactics. The legal battle between MS

and US Govt. is like to have more legal battles with more parties.

Consequences of the Decision

In spite of the seeming decline in the enforcement of antitrust rules in the
United States in recent years, the Microsoft case played a pivotal role in
fostering a market climate that was conducive to the rise of the largest
corporations of today, including Apple and Google.

Impact of the Ruling

The Microsoft case had a significant role in fostering a market climate that
allowed the largest firms of today—like Google and Apple—to arise, even
though it appears that antitrust rules have been less strictly enforced in the
United States in recent years.
 CONCLUSION
The antitrust case against Microsoft leads to a complex conclusion. At the
outset, the case raised important questions about anti-competitive behavior and
monopolistic activities in the technology sector. Due to Microsoft's hegemony
in the operating system industry, especially with regard to their Windows
platform, concerns were raised regarding innovation and fair competition.

In order to preserve consumer interests and encourage fair competition,

Microsoft's business practices were subject to a settlement that was reached at
the end of the court process. These constraints included preventing applications
from being bundled with Windows, granting third-party developers access to
application programming interfaces (APIs), and setting up an oversight structure
to guarantee compliance.

But the case has an effect that goes beyond the courtroom. It generated
conversations on how to prevent monopolistic dominance inside the industry
while yet promoting innovation in tech sector. The case highlighted the possible
repercussions of abusing market power and served as a warning to other
powerful businesses.

In addition, the Microsoft antitrust case highlighted how crucial it is for

lawmakers and regulators to maintain constant watch in order to handle the
changing problems of the digital economy. As technology develops,
maintaining fair competition and safeguarding the interests of consumers will
always be essential goals for creating a vibrant and creative market.