Microsoft as a MonopolyJoin now to read essay Microsoft as a MonopolySince the early 1990’s, the United States government and the Microsoft Corporation have ensued upon a battle in the United States courts. The main issue at hand is ultimately money, but one more importantly, the supposed “Microsoft Monopoly.” The federal government maintains that Microsofts monopolistic practices are detrimental to United States citizens, creating higher prices and potentially downgrading software quality, and should therefore be stopped. Microsoft and its supporter’s claim that they are not breaking any laws and they are just doing what they do; making money and providing a service. The only thing Microsoft is guilty of is taking advantage of free enterprise. There have been many arguments and issues that have been raised with the controversy over Microsoft and the U.S. Department of Justice’s claim against Microsoft of monopolistic practices in bundling its internet browser “Internet Explorer” into its popular Windows computer operating system. By doing this, Microsoft would effectively crush its competitors and acquire a monopoly over the software that people use to access the Internet.
Sherman Anti-trust Act was passed in 1890. The Sherman Act says “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. The Sherman Act also provided for “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. The Sherman Act put the responsibility in the hands of the government to investigate and prosecute those suspected to be guilty of this crime.
In 1914, the Clayton Act was passed in conjunction with the Sherman Anti-trust Act to assist with anti-trust cases. The Clayton Act prohibited price discrimination between different purchasers if such discrimination substantially lessens competition or tends to create a monopoly ion any line of commerce. The Act also prohibits sales on the condition that the buyer or leaser not deal with the competitors of the seller or lesser “exclusive dealings”, or that the buyer also purchases another different product, but only when these acts substantially lessen competition. Mergers and acquisitions where the effect may substantially lessen competition are prohibited also by the act. The last prohibition of the act is that no person can be the director of two or more competing corporations.
Microsofts antitrust problems began for them in the early in 1990, when the Federal Trade Commission began investigating them for possible violations of the Sherman and Clayton Antitrust Acts. This investigation continued until about 1993 without resolution, until Novell, maker of DR-DOS (a PC compatible operating system IMB compatible computers), a competitor of Microsofts MS-DOS (Microsoft Disk Operating System), filed a complaint with the Competition Directorate of the European Commission in June of 1993. (Moore 2) Doing this delayed the investigations even more, until August of 1993; the Federal Trade Commission decided to hand the case over to the Department of Justice. The Department of Justice (DOJ) moved rapidly, with Anne K. Bingaman, head of the Antitrust Division of the DOJ, leading the way. The case was finally ended on July 15, 1994, with Microsoft signing a consent settlement. (Moore 1)
The FTC and the Competition Bureau
SOUTH ATLANTIC, MA — The FTC’s antitrust task force today is charged with investigating a number of Microsoft related matters, including claims of antitrust violations against the U.S., South American countries in particular, and of a number of patents being infringed.
The report (PDF) is part of a two-part report called “The FTC Investigates Microsoft”, which is available at https://www.thefcc.gov/courses/advisory.pdf. The FTC report is due out later this month, according to an announcement late Friday, and is available at http://www.fcc.gov/about/en/newsupdates/releases/news/300009-news-eng.htm.
The first part of this report focuses on the FTC’s investigation, which has involved inquiries from the Office on Foreign Assets Control, the F.B.I., and various U.S. Department of Justice investigative agencies, including the U.S. Trade Representative, the B.I.A., and the Attorney General.
According to the FTC report, “The number of patents alleged to have been infringed as the result of any proposed class action for infringement exceeds 500.”
The second part of this report focuses on the FTC’s investigation of the issue of Microsoft monopoly and, as such, the number of patents it investigated.
The Commission has not filed formal complaints to the antitrust department directly, and the FTC could not say for certain whether it would file a case on behalf of a defendant, as did the Justice Department the first time the Commission decided to file antitrust complaints on antitrust violations.
The FTC’s ongoing investigation was initiated from July 1, 1993, through May 31, 1994:
In the United States, the FTC’s antitrust division began investigations on August 10, 1994 for alleged antitrust violations by Microsoft as a result of a merger between Microsoft and HP and the takeover of HP Corp. in a joint venture of Hewlett-Packard Inc., where Microsoft had been purchasing the intellectual property of Hewlett-Packard Incorporated. The investigation also began after Microsoft’s purchase of several patents from HP, and with Microsoft’s participation. When it was concluded that some of the patent licensing issues have not been resolved and Microsoft is no longer making significant payments to HP shareholders, the FTC filed a complaint on August 23, 1994. The Department of Justice conducted its own investigation in the context of the investigation into Apple’s patent case on “Apple intellectual property,” and concluded that the patent issue under investigation was patent-related and that Microsoft is infringing on the patents. After taking these steps, the FTC commenced its investigation and concluded that some of Microsoft’s patents infringe on certain trademarks. (Moore 2)
As in previous FTC investigations, the complaint was not filed immediately; the FTC’s investigation concluded after that conclusion. The FTC’s filing of its complaint on behalf of Microsoft only required the department to consider the information “discreet from relevant facts and circumstances,” and is to include other findings that may present additional questions.
According to the FTC complaint affidavit filed on behalf of Microsoft in federal court in New York, the three-year investigation began July 1, 1993, after Microsoft filed a non-disclosure agreement with the antitrust department for the “acquisition of .Microsoft intellectual property” pursuant to the Fair Trade Act of 1938, the Foreign Arbitration Act of 1949, the Foreign Intelligence Surveillance Act of 1978, the Foreign Intelligence Surveillance Act of 1978, and the Foreign Information Surveillance Act of 1978
The settlement focused on Microsofts selling practices. Before the contract, Microsoft would sell MS-DOS and Microsofts other operating systems to original equipment manufacturers (OEMs) at a 60% discount if that OEM agreed to pay a percentage to Microsoft for every single computer that they sold regardless if it had a Microsoft operating system installed on it or not. After the settlement, Microsoft would be forced to sell their operating systems according to the number of computers shipped with a Microsoft operating system installed, and not for computers that ran other operating systems. (Stross 59)
Another practice that the Justice Department accused Microsoft of was that Microsoft would specify a minimum number of operating systems that the retailer had to buy, eliminating any chance for another operating system vendor to get their system installed. In addition, Microsoft also would sign contracts with the vendors for long periods of time. In order for a new operating system to gain recognition, it would have to do so quickly, in order to show potential buyers that it was worthy. (Stross 60) With Microsoft signing long-term contracts, they abolished the chance for a new operating system to gain the popularity needed, quickly.
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