A Look at Government Intervention and Antitrust Law via the Microsoft Case

Growth and Development in the US Economy

In light of recent developments, I took a different approach to this paper. The Microsoft Antitrust case has been somewhat of a phenomenon that has become one of the most prominent cases in recent years. Because of this, I decided to look at government intervention into individual markets, along with antitrust law, via that particular case. I am of the opinion that we can learn a great deal by using that particular ongoing litigation.

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 k

In May of '98, the DOJ and the attorneys general of 20 states filed a pair of antitrust lawsuits against Gates' company. The suits claimed that Microsoft used Windows to attempt to force customers to use their other software products, the most important of which was their Internet Explorer (IE) web browser, as well as targeting contracts used by Microsoft that required companies to put up a "first screen" that was created by the OS creators. The states and DOJ also sought an injunction that would have required Microsoft to strip IE from Windows 98, which was due on shelves at the end of June that year. Microsoft's response to the injunction request was to claim that the IE browser cannot be taken out of Windows 98 system without severely damaging the functionality of the entire product. The injunction failed, had it been granted, though, Microsoft would have been required to remove the browser or include a copy of Netscape's Navigator and another competing browser with the OS. The lawsuits were to be heard by Judge Penfield Jackson, the same judge who heard the first lawsuit over the browser.

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;

Markoff, John "Gates says His Company is not Violating Antitrust Agreement"

Wall Street Journal, 3/24/00 http://www.msnbc.com/news/386566.asp

There are questions as to how effective any of this antitrust litigation will be. If one looks back to some previous cases, it looks to be rather unnecessary. In 1969 the government went after IBM for allegedly violating antitrust laws. That case was dropped thirteen years later when their market share started to drop with emerging companies (including a young Microsoft) gaining. Schwinn Bicycle actually lost an antitrust suit in 1967, but foreign competition relegated the firm to bankruptcy in 1992. RCA, a once dominant radio and television producer was made to license products. They followed the Justice Department mandate and directly licensed to Japan, who now is the leader in the electronics industry. (Schmidt, Lawyers)

Opponents of the renewed allegations were swift in coming to the defense of Microsoft. They point out that it was Netscape who dominated the browser arena early on and forced Microsoft to play catch up and aggressively market IE. Many people are of the belief that rivals of the software giant might have been better off focusing their attentions on improving their products rather than seeking refuge in the courts.

There are going to be very definite repercussions to the Microsoft case, no matter what the verdict. We have to weigh the cost of these trials against what usually ends up being short term dominance by a powerful firm. If Microsoft is broken up, Bill Gates isn't going to be the only one that is affected. If they're not broken up, it seems Netscape will have to suffer only moving 160 million units of their browser. It seems to me that the majority of consumers have benefited from Microsoft's dominance and progress in software. Government intervention just doesn't seem to do anything but hinder that benefit.

Mark Schmidt, the Director of Programs for the National Taxpayer's Union Foundation (NTUF) argued against the claims that "Microsoft's 'anti-competitive conduct has resulted in higher consumer prices, less consumer choice, and decreased levels of innovation'" made by Iowa AG Tom Miller, in a September 1999 article (Schmidt, Lawyers). Mr. Schmidt claims that after figuring in inflation, the costs to computer manufacturers of installing the Windows and MS-Office programs have actually decreased. In response to claims of anticompetitive behavior, he quotes Mitchell Kertzman of Microsoft rival Sybase as saying "Basically, all the big companies, all the companies that have won, are run by bloodthirsty killers," (Schmidt, Lawyers).

Some common words found in the essay are:
Justice Department, Internet Explorer, Borland Lotus, Microsoft Antitrust, Dept MS, Penfield Jackson, Apple Computers, Department Justice, Schmidt Lawyers, York Times, justice department, internet explorer, york times, schmidt lawyers, windows 95, microsoft antitrust, operating system, penfield jackson, violating antitrust, computer manufacturers, violating antitrust agreement, government looking microsoft's, unknown author microsoft, judge penfield jackson, attorney janet reno,
Approximate Word count = 3439
Approximate Pages = 14 (250 words per page double spaced)