A history of the battle between microsoft and the department of justice

An old Western Electric hand once said: More than a century ago, prior to joining the Bell System, Western Electric was the largest electrical manufacturer in the United States. At its inception, the company provided parts and models for inventors, such as co-founder Elisha Gray.

A history of the battle between microsoft and the department of justice

In the complaint filed against Microsoft in the U. Attorney General Janet Reno had previously staked out: It is such, Murray tells us, because Bill Gates has managed to win near-total control of the most valuable real estate in business today: He [Jim Barksdale, head of Netscape] knows it, Bill [Gates] knows it, and all the senators [who questioned Gates at a Senate hearing in early ] know it.

Gekko is renowned for having proclaimed, in a fit of self-congratulation, the moral goodness of unchecked greed. They have begun a drive to have the U.

They also want Microsoft to be prohibited from integrating into Windows new products that compete directly with non-Microsoft programs and to have Microsoft divest itself of its software compatibility laboratories, which offer a Windows-approved logo to outside vendors Markoff Indeed, in its antitrust suit, the Justice Department seeks such a remedy, mentioning Netscape and only Netscape by name.

Many market behaviors that might be construed as violations of the antitrust laws might also be interpreted as the behaviors expected of highly competitive firms. This issue is hardly a minor one: First is the technical legal issue of whether Microsoft violated its consent agreement with the Justice Department, along with the more general question of whether it has violated the antitrust laws.

For example, Windows Explorer, which allows computer users to organize files with relative ease, is presumably viewed by both Microsoft and the Justice Department as an integrated component of Windows.


Now, Microsoft has been accused of unfairly demanding that computer manufacturers also install Internet Explorer, a Web browser, as a condition of installing its Windows operating system.

The decision depends on how the language of the agreement is interpreted. We have no way of knowing how the courts will rule on such semantic issues, but our basic concern is conceptual, not semantic.

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Its answer cannot be presumed without rigging the debate over what the judge should do. The Justice Department has argued that Microsoft has given away its Web browser for years as a distinct, stand-alone product. Take out Internet Explorer from the latest version of Windows 95, Microsoft contends, and the operation of Windows is necessarily impaired.

Moreover, Microsoft has stressed that the integration of Internet Explorer is really a gradual process that has been under way for years, with full integration expected with the release of Windows 98, which Microsoft began shipping to computer manufacturers the same day the Justice Department filed its lawsuit Gates Again, the issue of whether Microsoft violated its agreement could be settled only in the courts, as it ultimately was in January Prior settlements and any future settlement of the current antitrust suit, however, have no bearing on the central concern of this article.

Many legal and economic scholars have concluded that the antitrust laws have been used more frequently to thwart competition than to restrain monopoly. That outcome has been associated especially with antitrust violations involving tie-in sales, which presumably is the specific offense for which Microsoft would be sanctioned.

Western Electric History

To appreciate that point, we need first to reflect on exactly what a monopoly is. To be sure, commonly accepted definitions of monopoly might suggest that Microsoft is a monopoly by virtue of its dominant market share. The tenth edition of the Merriam-Webster Collegiate Dictionary defines monopoly in three ways: If the relevant market is the browser market, as measured in dollar sales, then Microsoft has a zero percent share, for the simple reason that it has given Internet Explorer away.

Admittedly, in this case assessing market dominance on the basis of sales can be misleading, [16] but that point is precisely what needs to be kept in mind: A firm that exercises its monopoly power could actually have a smaller market share measured in unit sales, dollar sales, or both, than a firm that acts competitively.

Moreover, the present dominance of Microsoft in the operating-system market can be attributed at least partially to the pricing blunders of its competitors, most notably Apple, which adopted a strategy of restricting the sales of its operating system and then tying the operating system to the purchase of Apple computers.

But in order for a firm to act successfully as a monopolist, genuine barriers to the entry of new rivals must exist. Without barriers to entry, the price charged by the would-be monopolist will not hold, given that the market supply is not restricted.

Even if Microsoft were the only producer of operating systems, it may be only one of several or many potential producers, all of whom stand ready to enter the operating-system market or to expand their market share in response to profit opportunities.

The list of existing producers includes at least the following: But, then, it might not be the dominant producer that it now is. We emphasize again that the 80 percent market share held by Microsoft does not constitute evidence of significant monopoly or market power.

If Microsoft tried to increase its profits by restricting sales and raising price, then that conduct would surely entail that unmade sales would be left for the other sixteen or more existing producers, not to mention any number of other software firms that might have operating systems in storage and that stand ready to divert the time and energy of their software programmers to developing new operating systems.

The prospects of alternative existing or potential sources of operating systems must at least cause observers to wonder whether Microsoft could have achieved its market dominance by charging anything other than prices closely aligned with competitive levels.

A history of the battle between microsoft and the department of justice

Microsoft may be charging such a low price that other firms do not judge the development of an alternative operating system to be worth the required up-front investment.

Forty-five dollars for an operating system that incorporates millions of lines of code and is fairly powerful and easy to use does not seem like the price a monopolist would choose. The price of Microsoft stock could fall simply because investors worried that a higher price for Windows would in the not-too-distant future cause a larger number of commercially viable operating systems to be shipped by other firms, with the net effect being a smaller market share and profits over the long run for Microsoft.

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Higher current profits, in other words, could be more than offset by lower profits in the future, an outcome all the more likely in periods, such as the s, with relatively low interest rates. · The Microsoft Monopoly: Judge Jackson’s Findings leave no serious doubt that Microsoft is a monopoly -- that is, that it possesses market power in the market for Intel-compatible operating systems.

Judge Jackson bases this conclusion on three factors:initiativeblog.com The long-awaited court battle between Microsoft and the Department of Justice has started this week, with the government’s snooping ambitions hanging in the balance.

24 Jan New US law gives intelligence agencies huge scope to hack initiativeblog.com  · Moglen / Shaking Up The Microsoft Settlement 3 software competition.

The Bush Justice Department either didn’t under-stand or just didn’t initiativeblog.com Get the latest science news and technology news, read tech reviews and more at ABC News. · Microsoft has spent 21 years — more than half its lifetime — fighting antitrust battles with the U.S.

government. It has earned a page in the history books, waging one of the biggest monopoly initiativeblog.com  · In , the U.S. Department of Justice and 20 state attorneys general charged Microsoft with violating antitrust laws by using its dominance to drive competitors out of business; in , the initiativeblog.com

The Microsoft Monopoly: The Facts, the Law and the Remedy