The Microsoft Antitrust Case Essay

Words: 11233
Pages: 45
Open Document
The Microsoft Antitrust Case
A Case Study For MBA Students by Nicholas Economides* Revised April 2003

Abstract This case study discusses briefly the economic and legal issues pertaining to the antitrust case of the United States and a number of States against Microsoft.

* Stern School of Business, New York University, New York, NY 10012, (212) 9980864, fax (212) 995-4218, http://www.stern.nyu.edu/networks/, neconomi@stern.nyu.edu Copyright ©, N. Economides

2

Contents 1. 2. 3. 4. 5. 6. 7. Facts ............................................................................................................................. 3 Antitrust Law On Monopolization And Attempting To Monopolize .......................... 7 Economics Of …show more content…
The Court entered the consent decree as its Final Judgment on April 21, 1995.

2

3

4

however, that this provision in and of itself shall not be construed to prohibit Microsoft from developing integrated products); or the OEM not licensing, purchasing, using or distributing any non-Microsoft product.” 4 Thus, the 1995 consent decree imposes two restrictions, one horizontal, and one vertical. The horizontal restriction stops Microsoft from using zero marginal cost pricing. However, it allows for quantity discounts, disregarding the fact that zero marginal cost pricing is a special case of a quantity discount contract. 5 The vertical restriction of the 1995 consent decree prohibits product bundling created by contract, but allows Microsoft to keep expanding the number and type of functions of its products, including Windows. In short, in the 1995 consent decree contractual bundling was disallowed, but technological bundling was explicitly allowed. 6 During 1997, Senator Orin Hatch (R-Utah) held congressional hearings on Microsoft that featured Microsoft’s CEO Bill Gates, Netscape’s CEO Jim Barksdale, and PC manufacturer Michael Dell, among others. Senator Hatch took the position that if present antitrust law cannot deal with various anti-competitive acts attributed to Microsoft, Congress should change or enhance the antitrust laws. 7 Sun Microsystems, Oracle, IBM, Netscape, and Novell formed
Show More

Related Documents: The Microsoft Antitrust Case Essay

The Microsoft Antitrust Case Essay

The Microsoft Antitrust Case The Microsoft Antitrust Case In 1998 the Microsoft Corporation was at the center of an investigation by the U.S. Department of Justice (DOJ) which alleged the company of violating the Sherman Act. The Sherman Act is considered the foundation of federal antitrust litigation, and is used to “combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade” (www.law.cornell.edu). The DOJ…

Words 1354 - Pages 6

Essay about The Antitrust Case Against Microsoft

The U.S. government charged that Microsoft had violated antitrust law. Microsoft disagreed. Do you agree with the U.S. government, or with Microsoft? In answering this question, you may wish to address two issues. Was Microsoft a monopoly? Did it use its monopoly to compete unfairly against other companies? Commencing in 1990, Microsoft was investigated and then charged with violation of the Sherman Antitrust Act which governs United States businesses. The company was determined to be a monopoly…

Words 1891 - Pages 8

Essay on The Use Of AntiTrust Laws

is the presence of antitrust laws. These laws regulate certain engagements of individuals, trusts, corps, and combinations of corps in an effort to thwart or forcibly end a monopoly. Since 1989, Microsoft has been repetitively accused of violating antitrust laws. More than once, these allegations have led to an antitrust case being filed against Microsoft as a company. These antitrust laws and law suits are tremendously significant. Despite the outcomes of the cases, antitrust laws served their purpose-…

Words 2875 - Pages 12

ECON312 HW Essay

Antitrust Practice and Market Power Lamiya Marsh DeVry University: ECON 312 Professor Tucker Antitrust is a law that prevents anticompetitive behavior between firms. November of 1999, Microsoft was investigated for conducting antitrust behavior. Microsoft tried to form a monopoly in which they would gain control over the software industry. Their strategy was to implement their current market power and use their profits to shut down any other company that showed or could show a potential…

Words 508 - Pages 3

Essay on Microsoft Manages Legal and Ethical Issues

Microsoft Manages Legal and Ethical Issues S. Nevarez Olympic College OLRM 202: Introduction to Organizational Ethics Microsoft is the global leader in computer software, and well recognized in the field of corporate social responsibility and philanthropy. However, since 1990 the computing giant has been plagued by allegations of antitrust violations and monopolistic, non-competitive business practices. By answering the three questions posed in Part 5, Case 7 of Business Ethics: Ethical Decision…

Words 1117 - Pages 5

Essay about Antitrust 2

Case I consider the case of Microsoft, which was investigated for antitrust behavior. Microsoft is a largest software manufacturing company having one of the highest valuations in the world. It manufactures windows required for an operating system of servers and personal computers. Since 1991 the Microsoft has been investigated many times for the violation of antitrust laws particularly for Sharman Antitrust Act. The litigant alleged that the Microsoft misused its monopoly power on personal computer…

Words 583 - Pages 3

Essay Cp223 1

The antitrust cases against Microsoft in the United States and Europe have been the most high profile implementation of competition law in the last 20 years. Christos Genakos, Kai Uwe Kühn and John Van Reenen look at the key economic issues, notably what they imply for the conduct of competition policy in high-tech industries dominated by rapid innovation. CentrePiece Summer 2007 The European Commission versus Microsoft: competition policy in high-tech industries I n the various Microsoft cases…

Words 3662 - Pages 15

markets in action Essay

According to recent research, Windows Operating System is still taking root around the world, Appendix A showed the market share of Microsoft. Appendix A It has proved that Microsoft Corporation can be regarded as sole seller of the Operating System with negligence of other smaller competitors. Hyman & Kovacic (2004…

Words 1162 - Pages 5

Microsoft Organizational Structure

crucial for an organization to achieve maximum effectiveness and success. Microsoft Company, for instance, has an organizational structure consisting of board of directors who include Steve Ballmer as chief executive officer (CEO), senior leaders, executives, and technical leaders. Founded in 1975, Microsoft has grown today into a worldwide leader in software and services (Microsoft, 2009). The organizational structure of…

Words 891 - Pages 4

Microsoft Paper

Microsoft Case Team 7: Executive Summary Microsoft (MS) is a multinational computer technology corporation that develops, manufactures, licenses, and supports a wide range of software products for computing devices. In the mid 1990’s, Microsoft held the monopoly in the production of Operating Systems (OS) for personal computers (PC). When their monopoly was threatened by Netscape, MS began bundling the Internet Explorer (IE) web browser with Windows, using cross-promotional deals with internet…

Words 2100 - Pages 9