The Case of Microsoft and European Commission - Report Example

Business Law Introduction In this new global era, boundaries of world politics would lose its barriers in the aspect of increasing global investmentsas well as trends. Separate legal framework will always be essential for the international businesses rather than domestic businesses to maintain transparency. In international business, increasing global competition would make large issues in the growth of business. Sometimes international companies obstruct its rival’s out-of-the marketplace with the implementation of anti-competitive practices. In this context, it is worth to mention the case of Microsoft and European Commission regarding the implementation of ‘competition law’. With regard to above mentioned case, it is witnessed that a claim was made in opposition to the company of Microsoft that it is using anti- competitive practices involving the issue of licence. This aspect of licence was resolved in the year 1994 through settlement. Furthermore, various complaints against Microsoft were launched regarding some anti-competitive practices in market, which would be harmful for other existing companies in market (Shihata, 1996). Another aspect related to the case is the complaint against the European Commission regarding the disclosure of policies efficiently. The essay intends to evaluate the cases for better evaluation Discussion Parties In this case, two parties is involved, ‘European commission of European Union’ would impose the case on ‘Microsoft Corp.’ on the basis of ‘Competition Law’. Allegation The main allegation imposing on Microsoft would be that, Microsoft had a strong position in relevant market, where it controlled over 95% of the total ‘PC operating-system’ market. There were several rival companies in the market so Microsoft would withhold critical interoperability information from its rival companies. For server operating systems to be effective, it must be able to link effortlessly with the PC operating system, which was known as efficient interoperability. On the basis of this allegation, it is indicated that Microsoft would control the PC operating system indicating that it could boundary the efficient interoperability between Windows and its other rival companies, of which server operating systems by manipulating borders responsible for connecting Windows with other software. Along with that, Microsoft illegally bundled the ‘Windows Media Player’ with Windows. Moreover, Microsoft would not provide sufficient documentation and for this reason, it would consent full interoperability amid ‘Windows-servers’ as well as ‘non-Microsoft servers’, along with between its clients and ‘non-Microsoft servers’. This situation would state that providers of rival work group, with their server operating systems would be unable to compete efficiently even though they would be rated more highly by customers than Microsofts products on a range of constraints such as dependability, safety, and speed (Genakos, Kühn, Reenen, 2007). Legal basis of allegation In the year 1998 December, the case originated on the basis of complaint from Sun Microsystems. It claimed that Microsoft would refuse to convey the interoperability information, which essential to unite with Microsoft’s dominant PC operating system. Moreover, in the year 2000, the same complaint rouses from the rival market of Microsoft. The European Commission of European Union made a decision to investigate the Microsoft’s activities or actions regarding its product i.e. Windows Media Player. After investigation it was witnessed that, Microsoft had dominant position in relevant market, where it controlled over 95% of the total PC operating process market. Microsoft could limit the efficient interoperability among Windows and its competitors, whose operating server could be manipulating boundaries that are responsible for involving in and in Windows with other software. Along with that, it is important to state that Microsoft was blamed for its unlawful action of bundling Windows Media Player. Moreover, it was also held liable for not being able to provide proper documentation required for full interoperability among ‘Windows servers and non-Microsoft servers’. In the perception of this result of investigation, the commission filed a case against Microsoft on ‘Competitive Law’ ground (Economides & Lianos, 2010). The legal basis of this allegation is based on article 82 TEC, which states “any abusive situation make by one or more activities of a leading position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States” (Economides & Lianos, 2010). In this aspect, it is worth mentioning that abuse in similar forms comprises of imposing prises affecting trading aspects. Secondly, any restrictive or bias behaviour towards the consumers would be mitigated using production systems, market areas and technical developments criteria. In addition, with regard to the legal aspect it is important to maintain parity while trading goods for ensuring competitive advantage because creating a disparate condition other trading parties as well as effectively creating a competitive disadvantage for the rival trading companies (Economides & Lianos, 2010). These are all effective issues against the Microsoft Company. Final judgement From the case perception, the European commission would reach in a preliminary decision and it place an order to Microsoft that, it could offer both the form of Windows but without the Windows media player along with complete information, which would be necessary for competing with the networking software to interact completely with the Windows desktop as well as servers. This case would be in intellectual property criteria and a high-profile case in the US. In the intellectual property based case, there would be no specific norms or regulation accountable for situations. According to this problem area, Microsoft is just accountable for proper interoperability amid Windows and the other companies’ server operating systems by manipulating the interfaces responsible for connecting Windows with other software, along with omitting the Windows media players from both the version of Windows. In addition, commission noted Microsoft to disburse $794 million, which would be the regarded as a largest fine that has ever been depicted by the European Commission at a time (Economides & Lianos, 2010). Economic Consequences It is stated that, Microsoft is a leading brand in global market. Consistently, it introduced several software systems in the relevant market. In one word, Microsoft would be dominant on the relevant market with almost control over 95% of the total PC operating system market. Microsoft is rich company in software market. From the above discussion it shows that Microsoft develop Windows operating system with Windows media player without any legal paper works as well as it could not provide suitable certification, which allow complete interoperability amid servers of Windows as well as non-Microsoft servers. In the basis of rival companies’ complaint, commission would file a case against Microsoft and ordered $794 million to be paid along with sharing efficient interoperability to other rival companies (Genakos, Kühn, Reenen, 2007). Following the Commission’s decision, the most combative issue is that the interoperability evidence should be certified and proper information would be essential to attain total interoperability. The Commission left the particular conditions out of its primary decision because it already involved elaborating the appraisal of technical information, which would substitute to an independent monitoring trustee. The market place would change too rapidly in software basis, because over dominant market place, relevant company must incorporate sustainable strategies with innovations, and it should contain cost incorporation. Microsoft developed this type of advanced software system for PC to remain sustainable in relevant market. However, the legal issues would create difficulties, which have some consequences on economic basis. Microsoft needs to create a proper licensing for the latest version of Windows, with proper legal norms as well as regulations. Along with this, Microsoft needs to pay a penalty of $794 million, which is a large amount for its conduct. The long jurisdiction under these circumstances, Microsoft losses several million of money as continued to challenge the court orders (Genakos, Kühn, Reenen, 2007). Along with this case, Microsoft lost some competitive advantages from the market. Commission ordered Microsoft for creating a brand new form of Windows, which would not include windows media player or any multimedia technologies. On the other hand, other rival companies would provide such communication procedures on their products. This would be the total loss for the Microsoft in their business in relevant market. In these circumstances, Microsoft should develop other better system protocols with excellent product design to appeal in the technical market area as well as to compete with the existing rival companies in same field. Nevertheless, all these situations would need more cost, which might increase the product development cost of Microsoft. It could clearly state that all the perception would largely effect the economic situation of market as well as Microsoft (Genakos, Kühn, Reenen, 2007). Conclusion Being a leading software company in global market, Microsoft should have some responsibility towards the general market norms as well as its customer and Government Law should be obeyed in ethical terms as well. Antitrust regulators in the European Union should fight to extend clashes with Microsoft on the basis of its rival company’s complaints and that resulted in different outcomes. As these methodologies of commission would be, slow in application, until then controllers in both authorities’ hope that the provisions circumstances would not be able to come down and lead to more competitiveness, innovation, and benefits for consumers. The importance in the US on constructor and consumer choice could easily lead to continued Microsoft ascendances in various computer-software-markets, assuming the company produces high value programs in the future. The EU approach of endorsing the positions of Microsoft’s competitors may weaken the corporate giant, but early signs indicate that Microsoft would remain dominant but it should be conscious about all the perception of business law as well as corporate with the ethical norms, then the decisions could influence antitrust law long into the future. References Economides, N., & Lianos, I. (2010). Remedies. A Critical Appraisal of Remedies in the E.U. Microsoft Cases, 2, 2-10. Genakos, C., Kühn, K. U., & Reenen, J. V. (2007). Market power. The European Commission Versus Microsoft: Competition Policy In High-Tech Industries, 2-7. Shihata, I. F. I. (1996). The role of law in business development. Fordham International Law Journal, 20(5), 2-20. Read More