Antitrust Case Against Microspft Government

Antitrust Case Against Microspft

government charged that Microsoft had violated antitrust law. Microsoft disagreed. Who was right, Microsoft or the government? In addition, was Microsoft a monopoly? Did it use its monopoly to compete unfairly with other companies?

In the commercial war between the United State's anti-trust authorities and MICROSOFT corporation, there were not very many days of peace. The Federal Justice Department of the U.S.A. filed Microsoft a trial for practicing an abusive monopoly in selling the Windows Operating system and the Internet Browser 'Internet Explorer'. The issue that arises is whether Microsoft had acted correctly from a legal point-of-view when it juridical bounded and conditioned the sale of Internet Explorer by Windows operating systems. A decision in this case was announced in April 2000, obliging the company belonging to Bill Gates to divide Windows and Internet Explorer in two separate entities. But the decision was annulled following an Appeal made at the Supreme Court. The intention of Microsoft to boost its sales on both it applications - Windows operating system and Internet Explorer Browser was quite evident. The problem relies on the fact whether Microsoft infringed the anti-trust regulation in force. It is my opinion, that through juridical means - specific contracts and agreements, the Corporation managed to sell within a package both it products. It is a normal business decision, aimed at booting the company's sales and profits. Microsoft used the strong public awareness and global approval of its brand, products and application to sell on a package two products that belong to the company. This practice is common in other industries, like for example retail - shampoos and hair conditioners came in a single package so as to increase the sales of both products, and to meet the requirements and needs of customers in a more complete way. Furthermore, the price of the product package is lower than if we add the individual prices for each product. So the customer has also price incentives to buy the Internet Explorer and the Windows operating system. It is a sound commercial strategy.

Related to the question whether Microsoft is a monopoly or not, we may confirm it is if we take a look at its impressive market share in America. 90% is the sign that Microsoft creates qualitative applications that are used by individual consumers and corporations for their everyday needs. However, the tag of 'monopoly' applied to the Corporation is far fetched, because Microsoft did not use its market power to set prices artificially high, due to almost inexistent competition. Microsoft did not reduced drastically the products and services on a market to create scarcity and enhance the demand, and therefore the price an average consumer is willing to pay for a Windows operating system or an Internet Explorer browser.

2. What were some of the possible remedies in this case and examine. (discuss them and then choose one that would possibly work)

One possible solution for this anti-trust problem, which is currently proposed by authorities, is that Microsoft should allow its competitors to access its information database. In this way, the competition could build new applications that are compatible with the Microsoft operating systems - Windows so would not be affected by the Microsoft strategy to develop an integral and connected line of products. Another solution could be the individual taxation of Microsoft due to its market power. In this case, the taxes that could be as high as 10% from the total profits and would unfairly tax the advantage taken in time by Microsoft. The money for this tax could be otherwise used by Microsoft for development plans, or why not for resolving social aspects - the poverty reduction of third world countries.

Another answer proposed by analysts in this case was to leverage Microsoft with a tax of about 10 billion dollars, then it should be allowed to compete freely without the monopoly interdiction. The effect is similar with the one from the previous solution proposed in this document. It would negatively reward Microsoft for its ability to develop its business up to a market share of 90%.

The most obvious solution would be to let things as they are. Market-based economies is the key to durable development, and imposing taxes on Microsoft for its impressive market share, technology and performing and wide-usage products would be non-sense. Competition should not be allowed by authorities to penetrate the informational system of Microsoft, because this will be like a chef offering its famous recipes to competitor restaurants. It would be immoral and unjust from the economic point-of-view. Government may offer indirect incentives for innovation in this field (tax cuts, non-reimbursable government funds, a large pool of it specialists), and come up with solutions for creating institutions that could freely compete with Microsoft.