The Microsoft Company - Report Example

United s v Microsoft Introduction: The Microsoft Company is the largest software company in the world with Bill Gates as its Chairman. In 1983,the Company developed its first Windows Operating System and this propelled the Company into a position of prominence, with Gates, who owned 15% of Microsoft stock, becoming the richest man in the world. (www.microsoft.com). In the 1990s when the Internet opened up as a new way to communicate, the first browser in existence was Netscape Navigator. When Microsoft produced its own browser, Explorer, it sought to compel computer manufacturers licensed to install Windows to also include or bundle Explorer on the desktop and make it the default browser, if they did not want to lose their license. It also sought to restrict the entry of other browsers by inducing other computer manufacturers such as Apple and Intel to also bundle Explorer as the default browser. This led to action by the Government against the Company for restricting competition and seeking a monopoly. The Government’s case: The Department of Justice, on behalf of the United States, first filed suit against Microsoft, alleging that the Company has engaged in anti competitive conduct. The Government’s case against Microsoft is that being the largest software company in the world, it has monopolized 90% of the market with its Windows Operating system software. The Government also found it guilty of unfair and anti trust practices in competing against other companies. It sued Microsoft under the Sherman Antitrust Act of 1980, which prohibits businesses from engaging in actions to monopolize a market by unfairly eliminating competition.(www.microsoft.com). The Government’s contention was that Microsoft had integrated its own browser, Explorer into its Windows software that runs on 90% of all computers, in an attempt to extend its dominance in this market and prevent other Companies from entering the market with new software technologies.(Shriver, 1999). It restricted other browsers such as Netscape Navigator and Opera from competing effectively against Explorer due to the widespread market enjoyed by Windows software systems in computers. The following were the grounds based upon which the United States filed its case against Microsoft (www.crf-usa.org). (a) giving away Explorer with its Windows vista system in order to drive out competition from Netscape (b) issuing a threat to cancel windows licensing to computer manufacturers unless they also installed Explorer (c) Requiring Macintosh to install explorer as default browser or face cancellation of Macintosh version of Windows office software (d) Pressuring Intel not to develop its own browser in competition with Explorer (e) Causing technical difficulties in Microsoft windows users deleting explorer to change to another browser (f) Trying to manipulate the Sun Microsystems Java Programming language that facilitates browser technology, to be dependent on Windows. Microsoft’s defense: In its defense, Microsoft contended that it had not acted illegally in any aspect and that the Government had failed to prove its case that customers were being harmed by its action to bundle Microsoft’s Explorer with its Windows Vista system. (Shriver, 1999). The Company defended itself by stating that its purpose in bundling Explorer with its Windows Vista application was not to restrict others from competing in the market, but rather in the interests of customers. In opposition to the Government’s argument that the Sherman Act does not allow Companies to monopolize the market by restricting competition, it pointed out that the “overriding intent” of the Sherman Act is to protect the consumers, not the competing companies.(www.crf-usa.org). It argued that integrating its own Explorer browser to the Windows software worked in the interest of consumers by making the software easier to install and provided them with a “more engaging way to view information about the operating system.” (Shriver, 1999). The decision of the District Court: Microsoft’s anti trust case took a long period of six years to arrive at a final resolution. (Rooney, 2004). But in the initial trial stage on this important case in 2001, the District Judge Jackson issued his findings of fact which found that Microsoft’s dominance of operating systems in personal computers did indeed constitute a monopoly. The decision sided almost entirely with the case presented by the Government, finding Microsoft guilty of being a monopoly that was using unfair tactics in order to crush its competitors. (www.crf-usa.org). The Judge also held that Microsoft had violated the provisions of the Sherman Act by attempting to monopolize the market through restricting competition. The Judge’s two part ruling therefore held that (a) Microsoft had attempted and committed monopolization and (b) violated Sections 1 and 2 of the Sherman Act. The Judge also ruled that the Company was to be split into two, one which would produce the operating system, while the other would produce other software components. The decision of the District Court was however overturned by the U.S. Appeals Court did not uphold the harsh penalty that had been inflicted by Judge Jackson of shifting the Company into two, but instead chose to uphold an anti trust settlement agreement that Microsoft signed with the Department f Justice in 2001 in which it provided an undertaking not to engage in anti trust measures.(Rooney, 2004). The finding of the District Court can be supported to the extent that Microsoft may have been guilty of attempts to monopolize and for engaging in anti trust measures. But from the perspective of issuing a remedy, the decision issued by the Judge may be too harsh because in effect, it constitutes an intrusion by the Government into the private realm of an enterprise, which may not be acceptable in a democracy. Moreover, the Appeals Court reversed this remedy issued by Judge Jackson largely on grounds of judiciary misconduct. It found that the remedy of break up of the Company issued by Judge Jackson should be vacated for the following reasons(Thurrott, 2001). (a) The Judge failed to provide adequate reasons to justify a break up of the Company (b) The Judge did not hold a remedy-specific evidentiary hearing (c) The extent of Microsoft’s liability had been over extended by the Judge, thereby negating the need for such a harsh remedy and mandating a different remedy. Conclusions: On the basis of the decision of the Appeals Court, Microsoft was required to share its application programming interfaces with third party companies. The case was very important because it served to legally establish Microsoft’s attempts to work towards a monopoly, as a result of which the software giant was forced to make several concessions. It also entered into settlements with other companies like Sun Microsystems which brought action against it and anti trust cases are still being contested by Microsoft in Europe. While some view the decision of the Appeals Court as merely a slap on the wrist for Microsoft, it may have been effective to the extent that it forced the Company to halt its trend towards monopolization and step back to allow competitors to enter the market. This has also benefited customers in the long run. References: * Constitutional Rights Foundation, 2000. “United States v Microsoft”, http://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-c.html; * Rooney, Paula, 2004. “Microsoft’s antitrust case ends in U.S. as Appeals process begins in Europe”, Channel Web, http://www.crn.com/software/22103155; * Shriver, June, 1999. “Government hands its case against Microsoft to Judge”, Los Angeles Times, August 11, 1999, http://articles.latimes.com/1999/aug/11/business/fi-64569; * Thurrott, Paul, 2001. “Analysis of the Appellate Court opinion on Microsoft’s Anti-trust case”, Windows IT Pro, http://windowsitpro.com/article/articleid/21662/analysis-of-the-appellate-court-opinion-on-microsofts-antitrust-case.html; * United States of America v Microsoft”, http://www.microsoft.com/presspass/download/legal/RemediesTrial/PubIntDeterm11-1.pdf; Read More