Study Guide
Antitrust Overview
Antitrust - What's the big deal?
Why was the antitrust case bought up against microsoft?
Who is taking Microsoft to court?
What are the remedies to end the monopoly of Microsoft?
Microsoft and Monopolies
What now?
Antitrust - What's the big deal?
Antitrust proceedings in the USA got their start thanks to the efforts
of Senator John Sherman in 1890. The point of the law, according
to Senator
Sherman was to, "protect the consumers by preventing arrangements
designed, or which tend, to advance the cost of the consumer". The
Sherman
anti trust act was signed into law by by President Benjamin Harrison
on 2 July 1890, after passing by a 51 - 1 vote in the Senate on 8 April
1890 and by a unanimous vote of 242 - 0 by the House of Representatives
on 20 June 1890.
According to Dr. Keith
Poole, a professor of political science at the University of Houston,
"The legislative history of the Sherman Act is not simple nor clear.
There is no question that nearly everyone wanted to outlaw monopolies and
create competition. However, there was serious disagreement about what
part of the Constitution -- the Commerce Clause, the Judicial Clause, or
the taxing power -- was the legal basis for outlawing illegal restraints
of trade. In addition, in the Senate, there were two completely different
bills at one point.
The result has been that Anti-Trust law changes according to the prevailing
mood of legal opinion. Because legal opinion is in part a function of the
politics of the day, Anti-Trust law has always been one of the most politicized
portions of the legal
code. What was illegal in the early 20th Century may not
be illegal today. Other than a general agreement by everyone that monopoly
is generally not a good idea, Anti-Trust law shifts constantly in time.
Something that Microsoft Corporation
is now discovering."
So where did Microsoft go wrong? And did they behave unethically?
Dr. Poole's message is something that Microsoft's notoriously apolitical
chairman, Bill
Gates, failed to take seriously. As a computer scientist, Gates was
used to applying algorithms to problems and having the algorithms work
the same way every time. But the law is not an algorithm that is guaranteed
to be interpreted the same way each time. And the are no "Ethics algorithms"
to guide the way. Law is supposed to be based on
universal
ethical principles, but unfortunately, there are no universally accepted
norms as to what those principles should be! What Microsoft failed
to predict was the effect of its overwelming
success on the psyche of it's competitors, and indeed, on society at
large.
One thing is certain, although Microsoft and it's engineers may have
had some ethical
lapses, their software innovations have changed the world in which
we live forever.
Why was the antitrust case bought up against microsoft?
The Justice Department and the states believe that Microsoft has used
its monopoly in operating system software to protect its dominance and
eliminate competitors. The government says that in the long run, consumers
will be harmed, because there will be less competition and fewer choices.
More specifically, the government contends that Microsoft has engaged
in actions to preserve its Windows monopoly that violate antitrust laws.
The government also maintains that the company has used the power of its
Windows monopoly to attempt to monopolize the market for Internet browsing
software. In addition, government lawyers allege that the company has committed
other anti-competitive acts.
Microsoft contends that it is simply trying to innovate its products.
The company contends that its actions are legal and says that there's no
grounds of consumer indignation over the practices that the government
is targeting.
Who is taking Microsoft to court?
The U.S. Government and 20 state attorney generals.
What are the remedies to end the monopoly of Microsoft?
No matter who wins, the case almost certainly will be appealed, probably
all the way to the Supreme Court. If the government wins at the trial court,
it has already specified that it wants Microsoft to cancel contracts deemed
exclusionary. In addition, the government wants Microsoft either to strip
out its Internet browsing technology from Windows 98 or to include a rival
browser made by Netscape Communications Corp. The government also indicated
in October that, should it win, it would seek an additional hearing
where it would suggest additional sanctions that should be placed on Microsoft.
Ultimately, though, it is up to the judge to decide what penalties to levy
upon Microsoft should he rule in the government's favor.
Practically speaking, if Microsoft loses, industry analysts expect the
company to place Netscape's software in Windows 98 because removing Microsoft's
Internet Explorer software would be extremely difficult. It is impossible,
however, to determine the consumer impact of other "remedies" the government
may suggest.
It's difficult to speculate on the company's possible stock performance
should they lose the case. Microsoft's stock price dipped during the recent
market turmoil, but has stayed relatively level throughout the investigation.
Negative publicity hurts, and could erode sales or make it harder for
the company to do business deals with partners. Some industry analysts
also fear that Microsoft management could get so distracted by the lawsuit
that they might make poor business decisions.
Microsoft and Monopolies
-
A Recent court Ruling has declared Microsoft a an illegal monopoly. Before
looking at the ruling and information invovled, It is a good idea to take
a look at what a monopoly is.
-
After getting an understanding of what a monopoly is, we can take a look
at the most recent developments in this case.
Now look at the opinions and papers on MS and its track record and form
your own opinion and try to back it up. Is Microsoft a monopoly? To be
a monopoly you have to harm consumers through your actions as a company,
Has microsoft done this?
What now?
Microsoft has been undergoing antitrust legislative actions
for some years now. The claim against them is that they have unlawfully
maintained their monopoly of personal computer ("PC") operating systems
and have unreasonably restrained trade ( webcom.com
).
-
What is currently happening in the Microsoft antitrust case?
In June 2000, Judge Thomas Jackson ordered Microsoft to be split into
two companies.
-
Why??
Judge Jackson "declared the software giant an 'untrustworthy' monopoly
that refuses to abandon illegal business practices that crush competitors
and harm consumers" ( washingtonpost.com
)
-
Anti-Microsoft
Opponents of Microsoft, such as Joel Klein, believe that splitting
up Microsoft will stimulate competition in the PC operating-system and
the software industry. Our entire economic system is based on the
idea of many producers, which leads to the lowest prices and highest quality
products for the consumer. The US government has broken up other
such monopolies in the recent past, such as AT&T.
-
Pro-Microsoft
Supporters of Microsoft deny all claims that are put against them.
The Ayn Rand Institute claims that Microsoft is not anti-competitive and
in restraint of trade, it is the government that is guilty of these charges
( http://microsoft.aynrand.org/pr1.html
). They also say that Microsoft is being punished for qualities that
are generally respected in the United States, hard work, creativity, and
achievement.
-
Browser Wars
The term "browser wars" here is referring to the controversy that has
surrounded Internet Explorer and Netscape Communicator in the last few
years. It especially refers to the fact that Netscape claims that
Microsoft attempted to put them out of business by including Internet Explorer
free in the Windows Operating System.
Microsoft was accused of using its power as a monopoly to put Netscape
out of business. Microsoft denies these claims, and states that any
support for those claims are incorrect and taken out of context
( http://software.idg.net/crd_microsoft_65723.html
).
-
What Now?
Currently, Microsoft will have restrictions imposed until a higher
court affirms the ruling. This process could take a year or longer.
Microsoft is confident that a higher court will not affirm the ruling.
If Microsoft loses the case, it will have a huge impact on the software
industry and the nation as a whole.
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