Microsoft is a large-scale company offering a diversified assortment of high-quality software products. Microsoft is the birthplace of Windows series of operating systems that is installed on personal computers and servers. Microsoft also produces applications for PCs with Windows, and the most successful product among them is Microsoft Office with Word, Excel, Access, PowerPoint and Outlook. During the last decade Microsoft has been subjected to antitrust law violations for several times by the Department of Justice of the United States of America. The article by Nancy Weil and Robert McMillan (2003) discusses one of such lawsuits that took place in 2002.
This antitrust suit was filed on the behalf of Netscape Communications of America Online in American Federal Court of Columbian District in the beginning of 2002. It was claimed that Microsoft harmed the operations of Netscape taking unfair competitive measures and actions in terms of Windows operating system. Eventually, the lawsuit resulted in the repayment of $750 million dollars to AOL but the benefits did not limit to the monetary ones. Microsoft agreed to widely expand its cooperation with AOL by offering multiple opportunities related to Windows 9 series, instant access for the users, digital media advantages and many more. Moreover, two companies united under the common intention to fight piracy in the field of digital media which is an issue for both AOL and Microsoft.
The other antitrust claim against Microsoft was filed by the United States in a range of civil actions according to the statements of Sherman Antitrust Act. It was alleged by the plaintiffs that Microsoft was guilty of monopoly on Intel-based computers in the ways of treating the sales of operating system and web browser. The major question was whether it was legal for Microsoft to integrate its web browser to the core operating system of the computers on sale. It was argued that Internet Explorer outweighed all other competitor browsers as every Windows had IE on it. The other advantage of IE was that other browsers were still to be bought and downloaded. Microsoft claimed that their browser was integrated into Windows for the reason of innovativeness and user comfort. On the other hand, the opponents of this position proved that it was not necessary to install IE on PCs as an individual product version was available for Mac users. Moreover, this measure could have influenced the price level of Windows. It was accepted by Judge Jackson that Microsoft’s actions threatened the business activity of several software companies including Java, Apple, Linux and many others. The trial was over in November 1999.
However, these two cases against Microsoft were criticized by several famous economists and IT specialists. For example, Milton Friedman (1999), a Nobel Prize Laureate, believed that such increasing government regulation in the sphere of information technology is a dangerous signal. Friedman also argued that the use of antitrust laws in general is quite low for the economy.
Jean-Louis Gassee (1999) proved that Microsoft was not gaining profit out of the free installed IE but the company rather tried to meet the customer’s expectations to have a web browser at once instead of buying and installing it separately. He even compared this approach to other browsers including Netscape. Nevertheless, the true monopolistic intentions of Microsoft were hidden in the discounted values offered by Microsoft to the suppliers in order to lower the costs and leave the competitors behind.
In my view, Microsoft was not guilty of monopolization intentionally as no illegal actions were taken to provoke unfairness. Internet Explorer came as a free installed product but no limitations on downloading Opera or Netscape were set. However, due to the high competitiveness of the business it gradually started to enjoy all the benefits of monopoly. Looking at the complete list of monopoly indicators we can see that all conditions are there including high barriers to enter the market, monopolization through low pricing, using the latest technologies, lack of alternatives, and becoming a threat for competitors (Eisenbach & Lenard, 2000). Microsoft is successful enough to repay the heavy fines pressed on it, so this kind of punishment along with anti-monopolistic regulations seems the most reasonable resolution to me.