Microsoft was alleged to abuse monopoly power on its personal computers because of bundling Microsoft windows and internet explorer. Microsoft as a giant software manufacturer produced operating system…
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I therefore agree that Microsoft attempt is one of gaining monopoly power in the software industry. The windows operating system and the internet explorer browser are completely different products that should not be bundled together (Evans, 2002). Microsoft decision is thus one that denies fair competition from other browsers and their restrictive licensing is monopoly intended.
In a pure monopoly one firm has the complete control in the production of their products because of barriers of entries for other businesses. There is therefore no competition in the industry and the pricing is not based on the forces of demand and supply. I am against monopoly structure because it promotes inefficiencies and discourages competition. Consequently, monopoly products are of low quality and are highly priced hence encouraging consumer exploitation.
In a monopoly, prices and quantity demanded is set at the point of intersection of the marginal revenue and marginal revenue curve. If the marginal cost cuts the marginal revenue curve from the lowest point possible, it means that the firm is operating at optimal capacity and there is no room for expansion and it is at this point that the profit is maximized (Fellner, 1949). Since the demand curve is downward sloping, a reduction in price is accompanied by a corresponding increase in the quantity sold. The firm is therefore the price marker and therefore records high economic profits.
Monopoly also deprives consumers their sovereignty of choice, as there are no substitutes for the company’s products. Failure or conditions that can halt the production of a company’s products will therefore result in acute shortages. Monopoly pricing coupled with artificial shortages to the society will result into dead weight loss to the society (2009). The locative inefficiencies in monopoly lead to loss by the society. Moreover, monopolies have been
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Name: Course Name: Course Instructor: Date of Submission: Microsoft monopoly-Why was Microsoft investigated for antitrust behavior? Microsoft Company is one of the biggest companies in the world. It is also termed to be a computer software industry that is diversified.
In a way, the case versus the software giant is the product of the collaboration between the United States government and the various players in the compute industry that have been affected by Microsoft's dominance in today's computer market.
* Microsoft attempted to sabotage companies that they saw as posing a competitive threat.
The areas covered under this law to ensure fair business practices fall under four categories: agreements between competitors, contractual arrangements between sellers and buyers, the pursuit or maintenance of monopoly power, and mergers. The foundation for the Law was The Sherman Anti-Trust Act of 1890.
It has a strategy and it had time to use this strategy to its competitive advantage.
90-95% of all personal computers used in the world run on Microsoft software. The company has the broadest understanding
The decision-making and operations at Microsoft Corporation have to oblige by the anti-trust law. In this regard, the law prevents the corporation from signing agreements or engaging in practices that can hinder competition in the market.
ating original concepts into software products using investments in development, research, and offsetting these costs with the income received from product distribution. Some “open source” software trading forms affect its license-based software model (Stross, 1997).
Google was accused of competing unfairly by introducing applications that were only compatible with their products. Google was also accused of colluding with Internet Service Providers. Most providers were proving the search engine as the default application, something that was considered as favoritism. The accusations did not go well with some of the industry players who felt that Google was engaging in unfair competition.
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