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Microsoft Antitrust Issues and Investigations
Monopoly conditions can be defined by an array of circumstances that a company can find itself in if it does not have any reasonable competition. These conditions can manifest in a variety of ways and in some cases it is only reasonable to have one company provide goods or services; such as in the case of utilities or internet because these services require massive infrastructure investments to build which creates barriers to entry for other firms in the market. Many of these institutions are regulated by the government to ensure that prices are not raised to an extent that they create a large deadweight loss to society; a price that is higher than the market equilibrium in which marginal revenues equal marginal costs. In the event that a monopoly situation is created, the government can intervene in its operations to attempt to remedy the negative consequences of the situation.
One of the best examples of potential antitrust violations and investigations in the last couple decades can be illustrated with Microsoft's market position. Microsoft has spent 21 years -- more than half its lifetime -- fighting antitrust battles with the U.S. government and it has earned a page in the history books,...
The company was almost split up in the early 2000s because the operating system had an unfair advantage in the web browser industry. Since Microsoft is the world's most popular operating system for personal computers, the software that would come bundled with the system would be automatically available to the users. This meant that Microsoft's browser, Internet Explorer, had an unfair advantage against its competitors like Netscape. This was argued to give Microsoft an unfair advantage in the market.
The United States Department of Justice felt that Microsoft was abusing their market power on grounds other than price with its inclusion of the Internet Explorer (IE) web browser in its operating system. In 1994, Microsoft Corporation was sued by the Department of Justice on behalf of the United States for violating §2 of the Sherman Act "…by engaging in monopolization through a series of exclusionary and anticompetitive acts designed to maintain its monopoly power" (The Washington Post, 2000). Furthermore, the company was charged with, among other things, violating the Act by 1) attempting to monopolize the Web browser market, 2) tying its Internet Explorer (IE)…
References
Chan, S. (2011, May 11). Long antitrust saga ends for Microsoft. Retrieved from The Seatlle Times: http://www.seattletimes.com/business/microsoft/long-antitrust-saga-ends-for-microsoft/
The Washington Post. (2000, April 3). Conclusions of Law and Order. Retrieved from The Washington Post Online: http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/documents/col1.htm
The OFT may then refer the companies to the Competition Commission (formerly known as Monopolies and Mergers Commission). The Competition Commission also plays a major role to investigate the situations which are called 'Oligopoly Situations' which involve explicit or implicit collusion between firms. Then the Competition Commission decides if the monopoly is acting against the public interest or not. And if they find a firm with a monopoly situation they
Monopoly Radical Treatise on Monopoly When a firm is the only seller or supplier of a good or a service for which there is no close substitute, it is referred to as a monopoly. Broadly speaking, every firm would naturally like to have a monopoly given that monopolies do not face competition. However, monopolists can only succeed in a market situation where the barriers to entry are very high (Brue & McConnell,
The lack of incentives or competitive pressures may lead monopolistic firms to neglect minimizing unit costs of production, i.e., to tolerate "X-inefficiency" (phrase coined by H. Leibenstein). Included in X- inefficiency are wasteful expenditures such as maintenance of excess capacity, luxurious executive benefits, political lobbying seeking protection and favourable regulations, and litigation" (Khemani and Shapiro, 1993). In all, monopoly is the economic state in which a single company produces a
To this end the argument that monopolies are bad to consumers carries a lot of truth and fact with it and will only be fair to look at such an argument with due considerations. References Baker, M.J. (1985). Marketing strategy and management. Macmillan: New York. Belk, R.W. (1975). "Structural variables and consumer behavior." Journal of Consumer Research 2: 157-164. Besanko, D. et al. (1996). Economics of strategy. John Wiley and Sons: New York. Day, G.
A few years ago there were congressional hearings about the accusation against the larger airlines actively working to shut out any smaller newcomer to certain hubs around the world. While the ability and willingness of incumbent airlines to respond to competitive entry is central to competition, at some point that response may cross the line of fair competition and become an unfairly exclusionary practice intended to drive the entrant from the
Instead, IBM began to falter after a series of product failures. As a result, many companies gained market share against IBM with some even over taking it; an efficient market took care of the issue. Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or