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Antitrust law protects the public from companies that attain an undue domination of the marketplace via mergers, tying 1 product to another, vertical integration, and other practices tending to eliminate competition or bar entry into the market to newcomers.
In the early 1980s, Microsoft was a much smaller company than it is today. However, it had already established a reputation of being a predator, a greedy predator. They were known to terminate licenses mercilessly once they figured out a way to clone the given technology, regardless of whether it was legal or not. Back then, Microsoft had some enthusiastic competition. The biggest of which were Borland (programming), Ashton-Tate (databases), Visicalc and Lotus (spreadsheets), as well as Wordstar and WordPerfect (word processors). All of these companies have now either merged out of existence or are completely defunct, with the exceptions of Borland and Lotus (which are barely afloat). Microsoft now has the leading product in each sector of the market once occupied by these firms. The company was responsible for ridding itself of these early competitors by either buying them out or simply driving them into the ground. This early disregard set the tone for how Microsoft does business even today.
Microsoft's advantage comes from their domination of operating systems. "By definition, if the OS maker creates applications, they will run better with the OS than a third party's, and the OS owner can, over time, create modifications that will make this even more so," (Rapacious 1). Microsoft has the power to leverage their dominance in operating systems to gain a large market share in the various application sectors. They have always been able to do this and as a result have been able to get, or achieve, whatever it is that they have wanted. This is the vertical integration that the antitrust laws talk about.
In a July 1994, settlement, the Justice Department came to an agreement with the software giant over the antitrust charges it had filed against the company. The charges were brought after the department found out that Microsoft was giving personal computer manufacturers a discount on their OS when the PC manufacturer would pay the company a royalty for each computer sold, including those that without MS-DOS or Windows software. "The practice gave PC makers little incentive to install competing programs since they would have had to pay a royalty to both the competitor and Microsoft," (Ramstad 1). The settlement only dealt with this single count and left Microsoft alone to continue performing its numerous other anti-competitive practices.
In the spring of 1995, Judge Stanley Sporkin rejected the deal that the Justice Department's settled on. He did so on the grounds that 1. The government refused to give the court enough information about the agreement; 2. The deal was too narrow; it failed to deal with issues like OS/application leverage, and allegations that Microsoft intentionally made changes to Windows that made third party applications hard to run; 3. The parties did not adequately consider anti-competitive issues; 4. The deal was unsatisfactory when it came to enforcement and compliance mechanisms.
Around the time of the settlement, some suggestions started to come about how to deal with Microsoft. Stewart Alsop suggested "that Microsoft be forced to document the API's in Windows, so that other companies could legally clone it. That would still leave Microsoft an eighteen month head start on each release," (Rapacious 3). It was also suggested that the company be broken up. This way, the operating system and the applications would be separated into different companies and the playing field would become more level.
In late August 1995, U.S. District Judge Thomas Penfield Jackson ended what had become a thirteen-month judicial review by signing the agreement Microsoft and the Justice Department had come to. The review had been elongated by Judge Sporkin's rejection of the deal. The signing, however, did not take the heat off Microsoft's proverbial back. The Justice Department had already begun investigating some of their concerns about the company's practices regarding new software and whether they were complying with the agreement. This investigation has become the allegations we have all been hearing about in these last few months.
By the time the Judge Jackson signed the agreement, the government was already looking into Microsoft's decision to include access to its new on-line service, the Microsof
Quotes talked about in this paper
Terminology referenced in this essay
Antitrust law, OS, software giant, software industry, WordPerfect, word processors, operating systems, integrated products,
Technology mentioned in this report
Internet Explorer, operating system, PC, Internet, API,
Names referenced in this research paper
Judge Sporkin, Thomas Penfield Jackson, Adam Schoenfeld, Janet Reno, Bill Gates, Cooper, 11/20/95 http://www.zdnet.com/pcweek/news/1120/omsn20.html Labaton, Orin Hatch, Stewart Alsop, Evan, Jeri, Kevin Arquit,
Organizations included in this paper
government, http://www.spectacle.org, Justice Department, Violating Antitrust Agreement, Department of Justice, Justice Departments, Federal Trade Commission,
OperatingSystem mentioned in this essay
Windows 95, Windows,
Locations talked about in this research paper
Companies included in this essay
Microsoft, His Company, a start-up producer, Apple, Borland, MSN, Ashton-Tate, CompuServe, Lotus, Navio, Earthlink, Navio Communications Inc, Jupiter Communications,
Keywords mentioned in this essay
Microsoft, company, antitrust, Windows 95, Internet Explorer, operating system, antitrust laws, New York, Microsoft antitrust, Microsoft Network, competition, computer, the microsoft network, market, Thomas Penfield Jackson, Netscape, vertical integration, WebTV, competitor, non disclosure agreements, non voting stock, software, This administration, software industry, Windows OS, Senate Judiciary Committee, federal judge, Internet Browser, Navio, personal computer, Federal Trade Commission, browser war, manufacturers, anti competitive practices, Netscape Communications, monopoly, 1 million, market share, Stanley Sporkin, documents, Stewart Alsop, consent decree, Adam Schoenfeld, first glance, Bill Gates, word processors, Apple Computers, set top boxes, technological innovation, Orin Hatch,