Microsoft Corporation is a popular target for private antitrust claims. The claims increased due to government action against Microsoft (Delta & Matsuura, 2004). The courts of appeal agreed on the government claims that Microsoft had monopoly power in the PCs (stands for Personal Computers) market, its network effects and the applications barrier to entry. The government also claimed attempted monopolization of the browser market by Microsoft, but lacked sufficient evidence to show the entry barriers that sheltered it (Page & Lopatka, 2007). The phrase “applications barrier to entry” shows the negative attitude in which the United States’ court of appeal viewed the computer company.
Thomas Penfield Jackson, a US district judge, stated in findings, “If one firm controlled the licensing of Intel-compatible PC operating system world-wide, it could set a price of a license substantially above that which would be charged in a competitive market” (McCullagh, 2003). This is a substantial argument and genuine accusation.
Microsoft signed a consent decree with the EU (European Union) that allowed it to keep an eye on Microsoft’s compliance for six years in 1994. In 1997, the EU opened an inquiry after receiving complaints from Sun Microsystems that Microsoft would not reveal necessary APIs (application program interfaces) needed to interface with Windows NT. It was not until August 2000 that the EU levied formal charges against Microsoft for withholding needed information from competitors. In the August 2004 ruling, Microsoft was ordered to submit 100% of its documentation to the EU which happened in 2006 (Piltzecker et al., 2007).
In this case Microsoft was acting arrogantly or as used by the Commission of European Countries “an abusive monopoly”. Under decrees and agreements or scrutiny by judicial bodies, Microsoft could have complied to avoid legal wrangles, which cost a fortune. The claims were valid.
The Department of Justice (DOJ) investigated Microsoft’s plans to include access software in its online service, MSN (Microsoft Network), in Windows 95. The DOJ chose not to object to the release of Windows 95 and completely faded its allegations when MSN failed to attract a large base of subscribers (Page & Lopatka, 2007). Claims seem to have been fueled by viewing Microsoft’s prosperity as a growth factor to being a more dominant monopoly.
There were cases that customers alleged to be over-charged for Microsoft Windows’ products. For instance, a group of customers from California in a class-action suit against Microsoft in 2003, settled at 1.1 billion dollars for being over-charged. McCullagh (2003) cited the law firm that filed the suit, Townsend and Townsend and Crew, to have described it as “the largest recovery of a monopoly overcharge ever achieved in the United States and the largest ever achieved under the antitrust laws of California”.
Page & Lopatka (2007) in their discussion on operating systems, explain that some applications on network effects are written on specific operating systems, which in turn, must be compatible with the computer’s microprocessor. This depicts that Microsoft had no fault in producing compatible applications for networking purposes for end-users. Being an application developer, Microsoft has an incentive to write its program for the operating system used by the greatest number of expected users of the application. Judge Jackson also put across that a customer will find an operating system more desirable since it supported more applications compared to another (McCullagh, 2003). This despises the fact that a customer may take into account the quality of an application for its particular uses.
Dramatic modification of the legal principles and institutions of United States may have resulted to the delay or impairment of the global information infrastructure (Delta & Matsuura, 2004). These law suits came at a time when the industry was feeble and still taking root in the market. They worked towards the collapse of a progressive establishment rather than the collective influence to attain growth and success.
Reference List
Delta, G. & Matsuura, J. (2004). Law of the internet. 2nd ed. USA: Aspen Publishers.
McCullagh, D. (2003). Judge OKs $1.1 billion Microsoft deal. CNET news. Web.
Page, W., & Lopatka, J. (2007). The Microsoft case: antitrust, high technology and customer welfare. Chicago, Illinois: University of Chicago Press.
Piltzecker, T., Piltzecker, A. & Chaffin, L. (2007). Microsoft Vista for IT security professionals. Rockland, MA: Syngress Publishing.