Dominant Position of Microsoft Corporation - Essay Example

Local Lawsuit       Local Lawsuit On 5th November, 1999, the District Court established that Microsoft Corporation utilized its dominant position in the computer system industry to unfairly eliminate rivalry in other technology industries, as well as the Internet Browser industry. Microsoft was fearful of rivalry from Intel’s software progress. As a result, in a meeting held by Microsoft Corporation on 2nd August 1995, the chief executive officer, Bill Gates supposedly warned to cease Windows backing for Intel’s developed microprocessors except if they could get alignment between Microsoft and Intel’s communication and internet software programs. In addition, Bill Gates instructed Andy Grove to close Intel Architecture Laboratories (Liebowitz & Margolis, 2001). These labs maintained Intel’s internet software engineering. Gates wanted Intel to incorporate its internet sources in a web server linked to Microsoft’s Tiger program. This means the web server would have less effect on the market, produce low sales, and include Intel to Microsoft’s web server tools. Intel’s concerns went beyond Intel’s creation of Native Signal Processing technology. The Native Signal Processing technology was a component of software that combined with both the hardware and Windows OS so as to support 3D graphics, real time video, and real time audio. The main aim of this technology was to give clients audio-visual occurrence that was equal to television. Therefore, Microsoft attempted to stop Intel from developing the Native Signal Processing technology (Liebowitz & Margolis, 2001). These actions led to the lawsuit involving the United States and Microsoft. Microsoft Corporation management could have adopted a number of methods to evade the issues that led to the lawsuit. First, Microsoft management should have allowed Intel to continued utilizing Windows for developing their microprocessors (Liebowitz & Margolis, 2001). They could do this without requiring alignment with Intel’s communication and internet software programs. Nonetheless, the management could draft rights for a part of the developed microprocessors. This could give them a legal right to own a component of whatever Intel developed. Microsoft’s management could have shared the company’s application programming line with Intel or any other additional party. These third party corporations could gain full access to Microsoft’s source code, systems, and records (Abramson, 2005). Gates wanted Intel to incorporate its internet sources in a web server linked to Microsoft’s Tiger program. This means the web server would have less effect on the market, produce low sales, and include Intel to Microsoft’s web server tools. This would promote compliance and independence amongst the companies. In addition, this collaboration between Microsoft and other companies will permit the users or clients’ advantage from network effects and help the companies avoid litigation. This is because the companies will use their best technologies together to produce a significant result. Also, the whole process will be transparent. The District Court judged that Microsoft Corporation had sustained a monopoly in the industry for compatible PC operating systems of Intel Corporation by violating sections of Sherman Act. Microsoft attempted to attain monopoly in the industry for internet browsers. Also, Microsoft Corporation illegally joined two distinct products, Internet Explorer and Windows. In addition, the court established that similar notions that determined liability under sections 1 and 2 of the Sherman Act were highlighted in this case. Also, Microsoft was involved in exclusionary behavior, in its dealings with Intel. Microsoft wanted Intel to incorporate its internet sources in a web server linked to Microsoft’s Tiger program. This means Intel would depend on Microsoft’s Tiger program when utilizing its internet sources. Microsoft also employed pressure techniques that destroyed Netscape. This made Intel’s internal utilization of Netscape was non-publicized and minimized. The Microsoft Corporation attempted to employ the technique of embracing, extending, and extinguishing (Bagley & Savage, 2010). They embraced Intel’s technologies. Later, they wanted to extend Intel’s technology by promoting an alignment between Microsoft and Intel’s communication and internet software programs. When this proved difficult, Bill Gates warned of terminating Windows’ backing for Intel’s developed microprocessors. Bill Gates also directed Andy Grove to close Intel Architecture Laboratories which maintained Intel’s internet software engineering. Microsoft Corporation violated section 1 and section 2 of the Sherman Act. The case was filed by different state and the United States of America. Microsoft had violated the terms of the two sections in the Sherman Act with the view of maintaining monopoly in the industry. They wanted Intel to incorporate their microprocessors into their systems. The Court judged that the technological and contractual bundling between Microsoft’s operating system and Intel’s operating system was unlawful. Judges hold that the rule of reason, instead of analysis, should guide the legitimacy of securing agreements comprising software products. Similar facts under the Sherman Act authorized liability findings under the antitrust provisions of the state law (Brams, 2000). The management can leverage knowledge of the sources of law to avoid such scenarios in the future. In this case, Microsoft Corporation argued that, in 1998, the court of appeal had judged they could incorporate new functions and features to Windows. Therefore, Microsoft’s managers can argue that the law permitted them to incorporate new technologies into Windows, and there is nothing wrong with using technology from other areas to develop Windows. The management can also argue that it was in competition with Intel and that such competition does not cause any acts of anti-competition (Bagley & Savage, 2010). The mangers can also argue that Microsoft does not hold any monopoly power. There are several ways the management can pursue out of court settlement. First, they should provide discounts and negotiate royalty in relation to market development agreements. Under this, Microsoft will give similar terms to everyone, with prices differing solely on volume. In addition, discounts will be awarded on the basis of procedures that are objectively verifiable. Second, Microsoft should agree not to design contracts that do not permit the other partner or partners to display, feature, or use its rival’s products. Third, the management should agree to share technical information among other parties and probable recipient of information without discrimination. Fourth, managers should agree to sell the old Windows version at an unchanging price for an agreed period. They will not change the prices when an advanced version is put on the market. Finally, the management should pay for damages that befall any party (Bagley & Savage, 2010). References Abramson, B. (2005). Digital phoenix: Why the information economy collapsed and how it will rise again. Massachusetts: MIT Press. Bagley, C. E., & Savage, D. W. (2010). Managers and the legal environment: 2010 custom edition (6th ed.). Ohio: South-Western Cengage Learning. Brams, L. L. (2000). Civil litigation: The official guide to legal specialties national association for law placement. Chicago: Harcourt Legal & Professional Publications. Liebowitz, S. J., & Margolis, S. (2001). Winners, losers & Microsoft: Competition and antitrust in high technology. Independent Institute. Read More