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Monopolization: United States V Microsoft Corporation

Introduction

Monopoly is one of the economic crimes that are perceived as oppression of other companies. It begins when large companies control a bigger market share than the rest of the participants in the economy. Such a strategy poses a critical threat both to exploitation of consumers and deliberate provision of low quality goods and services. It is thus the role of the government of the United States to ensure that the American Citizens are protected from exploitation both internally and by foreign companies (Cabral, 2017). Proactive strategies also ensure that the field of innovation is not squashed following the fact that even Bill Gates also got his position with Microsoft mainly through innovation. Laws against monopoly serve to enhance market equity and to sustain quality provision of reliable service deliveries to consumers. The case between United States and Microsoft Corporation was meant to fight against the monopolization allegations that Microsoft were slowly enthroning to. The case brought about interesting concerns that makes the ant-trust lawsuit still very relevant in the exploration of economical studies.

Allegations of the Plaintiff

Microsoft was sued by more than 20 states claiming that it had violated Sherman’s Act of 1989 , its first and second proceedings. Joel I. Klein who headed the case stated that Microsoft had taken part in monopoly practices and was posing a serious challenge to other competitors. He cited Intel computers that had Internet Explorer installed in them at the very time of processing. This indicated that any personal computer had the application permanently installed by Microsoft so that the customers would readily use the browser to access internet services (De Vries, 2001). There was however other browser companies that offered the browsing application which consumers would use to gain access to the World Wide Web. By 2001, Opera and Netscape Navigator were already starting to fall out of business given that the application would take long hours to purchase, download and install from play stores. This was the act that made the lawsuit feel that making the Internet Explorer installed in personal computers gave the consumers an upper hand in choosing to stay with the browser than struggling to download and install other applications. The competition was already not fair (Marshall, & Marx, 2012).

United States Department of Justice was further informed that Microsoft corporations had the web browser installed in all windows rating from the computes to the mobile phones. Application programming interfaces (API’s) were unilaterally in favor of Internet explorer and not any other web browser because of the synchrony that was facilitated by instant installation of the application during the manufacturing and assembly of the gadgets (De Vries, 2001). The lawyers argued that Microsoft was going against the Consent Decree when they decided to go against the court orders by falsifying their videotapes that were to be used as evidence in court. Companies claimed that the Internet Explorer was a separate application that was not supposes to have full access of Microsoft installation given that there were no clear indications that that two had merged. That was a little concern though when their main desire was to create an environment where competitors would have a plain ground of marketing their products to consumers at equal competitive measures.

Microsoft Corporation Defense

Bill Gates appeared in court to defend his position and that of the company being that he was the founder and the chairman. He begins by saying that he was giving priorities to applications that were giving priorities to Microsoft and windows. He explained the installation of Internet Explorer into the Microsoft as a browser, saying that removal of the application program from Microsoft would completely slow down the speed of windows operation (De Vries, 2001). In their order to present a clip as an evidence to support their statements, they recorded a tape but deliberately omitted the part that was relating to the speed of Microsoft and instead showed that other browsers would readily be installed.

Jim Allchin who was the then senior Vice President of Microsoft argued that installation of Internet Explorer into personal computers was a direct link that would enable the other browsers to find it easier to market their products. In his statement, He affirmed that in one way or the other, all the programs would be obtained from an e-commercial section through marketing. In their attempt to remove the sale of applications through CDs, it was wise that every computer have a browser that would enable consumers to download other applications including other browsers (Marshall, & Marx, 2012). The unfairness of the completion, to them, was perceived as a part of an attack to the innovation that aimed at improving the quality of services that they were yet to offer to consumers. They even wrote a formal letter to President Bill Clinton to address the concern stating that the plaintiffs were derailing the technological progress in the United States.

Bill Gates was however was confronted with many procedural questions where he denied all the underlying concerns claiming that he could not recall all the false statements that were channeled towards his company. He affirmed that Internet Explorer had become a serious part of Microsoft and that all the customers would readily and cheaply acquire services without a hustle or a tussle (Marshall, & Marx, 2012). To Microsoft management committee, the merge with Internet Explorer was something that was internal and was not suppose to be communicated to the public as the competitors demanded. Internet explorer was faster and enabled quick access to the World Wide Web that runs close to everything in the current globe. This was a choice made that was painful to the other competitors according to Bill Gates. He for instances stated that if Microsoft decided to install all the web browsers, the case would not be in the courts. Nevertheless, it was an informed choice and the company had advantages that made Internet Explorer the preference choice.

The Judgment

The ruling that was made by Judge Thomas Jackson found Microsoft guilty of monopolization attempts, Market monopoly actions and violation of Sherman Anti-trust act (Viscusi, Kip, Joseph and John (2005). He imposed a penalty that would see Microsoft split into two so that one part would be producing operating systems while the others would produce the components of software. The judgment was not welcomed at all both by the Microsoft legal team and Bill Gates himself (De Vries, 2001). The judge also cited that failure of the company to corporate and the presentation of a falsified video-clip as was detected by the government showed that Microsoft was out to squash the progress of other companies including Apple. The case that was witnessed by MIT economist, Frank Fisher, at that time fell in favor of the plaintiffs but the company filed a petition to the Supreme Court almost immediately. Bill Gates continued to lament that the company was under attack by a litigation process that was already corrupted and prejudiced. He cited that it was their wish that they succeed rather than dominate the market. Their competitors were rather lazier and that is why they were channeling al their efforts in courts to ensure that they put Microsoft down their level (De Vries, 2001).

They filed a petition to the Supreme Court but the case was referred to federal appeal courts stating that the case was partially appellate. The appeal overturned the ruling with more emphasis on Judge Jackson who was configured to have violated the ethical codes of conduct for judges when he failed to attend a court proceeding. The appealed ruling state that Microsoft would not separate but there were certain strategies that the company had to comply with in order to alleviate the monopoly threats in the technological market. At first, the company was not to change its coding system. Microsoft was also allowed to provide access to other competitors for a period of five years so that they would be monitored to see whether they were complying with the ruling.

Discussion

Monopoly is an enemy of development in the economy in the sense that it enables only a few to thrive and continue harming the rest. Innovations and inventions have been listed buy various scholars to be the most contributing areas towards fighting unemployment in the youth. Monopoly doesn’t give room for the new ideas to thrive or if they do so, then it can only exist within a big company (Cabral, 2017). This is where the bigger companies buy the smaller companies at cheaper prices and make fortune benefits over an extended period of time. In addition, companies that are monopolized have no claim of the market share at all. They suffer loses following stock retention and poor sales. The competitive advantage that bigger companies have can as well push smaller upcoming companies out of the market. Nevertheless, merging of companies should never be confused by monopoly (Marshall, & Marx, 2012). Companies come together to improve their market share and capital base so that they can limit the stiff competition and make more profits. Monopoly on the other hand occurs when one company develops a strategy that gives it an advantage over other companies. It therefore gunners the powers of dictating the market through its influence. That is an economical crime.

Conclusion

Microsoft did show some elements of monopoly according to its case verses United States. The government was not deliberately attacking the company, but rather adopting strategies that were more inclusive and protective to all the innovations by American citizens. Every technology company was vital and its contribution in the American status quo was significant. In the event that the ruling was harsh on Microsoft, the company would have taken an alternative of relocating to another country with better policies and that would not be good to the US especially when it had many enemies who would readily give refuge to the billionaire. It is through the ruling that the company of US was saved. With regards to economical perspectives, an economy of scale that accords fair competition to other companies ensures that marketing is non-biased.

References

Cabral, L. M. (2017). Introduction to industrial organization. MIT press.

De Vries, M. W. (2001). United States v. Microsoft. Berkeley Tech. LJ, 14, 303.

Marshall, R. C., & Marx, L. M. (2012). The economics of collusion: Cartels and bidding rings. Mit Press.

Viscusi, W. Kip, Joseph Harrington, and John Vernon, 2005, Economics of Regulation and Antitrust.

� I thought you did a nice job of discussion the legal environment of the Microsoft case. I have a few comments for you. The first is that I would like you to discuss some of the economic aspects in more detail. (Monopoly, tying, etc. in economic terms). What are the significance of these to the Microsoft case? Also, you have to discuss a present day antitrust issue with respect to the Microsoft case. I did not see any such discussion at the end of your paper (See the paper assignment prompt on Isidore). Finally, I thought that your paper was written fairly clearly, just make sure to go over it when finalizing the paper to make sure that the mechanics flow smoothly (grammar, word choice, etc). Overall, I think this is a good first draft of a paper.

�I’m not sure what you are saying here.

�Sherman Act of 189?