Antitrust and microsoft.

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Antitrust: A View of Antitrust Activities in Modern America                

            Business ethics play a vital role in the success of any particular company, although there are many sub-areas of ethics as they pertain to business, a predominant area would be monopolization.  Since 1890 the federal government has put into place a set of governing laws that pertain to the practice of monopoly, these laws were coined as “antitrust laws”.  America was not the first to introduce such laws, our current antitrust laws can arguably be compared to engrossing laws of 16th century England which considered “the practice of acquiring a monopoly of goods in order to sell them at an inflated price”(Colombia Encyclopedia, 2004) an unacceptable method of influencing the market, these offences were considered criminal in 1844 in England.  As previously stated, antitrust laws began in the year 1890 with the introduction of The Sherman Antitrust Act(1890),  this act “outlawed trusts and prohibited “illegal” monopolies. A trust was a relationship between businesses that teamed up through anti-competitive agreements to gain market dominance”(NC State University, n.d.).  In 1914 The Clayton Antitrust Act(1914) added onto The Sherman Antitrust Act(1890) by further outlawing price fixing, abusing power to create a monopoly, and interlinking companies that share the same board of directors.  As we can see antitrust is not taken lightly in the business world, in the following article we will observe an antitrust lawsuit which is in the wind down stages and is a highly publicized affair.  The United States VS. Microsoft is one of the largest antitrust lawsuits of all time and has had numerous impacts on the market, political impact on economic behavior, diversity, technological innovation, and market structure.

           The United States VS. Microsoft was a group of consolidated lawsuits against Microsoft Corp relating to The Sherman Antitrust Act(1890) by the United States department of justice and 20 U.S states.  The main complaint was that Microsoft “maintained its monopoly power by anticompetitive means and attempted to monopolize the Web browser market”(Wilcox, 2000).  In summary Microsoft was bundling its Web Browser “Internet Explorer” with its “Windows” operating system, so that every computer that used the windows operating system also had the web browser as its primary web browsing software.  It is of no doubt that Microsoft was indeed victorious in “the browser wars”, the bundling of software was not the only complaint, as Microsoft also altered its application  programming interface to work flawlessly with its internet explorer software, while other browsers such as AOL and Netscape did not operate as seamlessly.

            The settlement of the case was that Microsoft was required to share its application programming interface with third-party software providers, and they were also to allow a panel of three members who would have access to all of Microsoft’s systems, records and code to insure their compliance with the disposition.  Soon before the  verdict/settlement hit the media, the market reacted, Microsoft’s stock plummeted “ $15.38 to $90.88 …erasing about $70 billion from the company’s market value”(Wilcox, 2000).  This was a showing of the consumer and shareholders protecting themselves, with an obvious guilty verdict on the horizon, and the possibility of Microsoft being broken up, many wanted to scrap their losses and get out of the company while they still could.  Can we blame them?

Tchnological innovation has pushed The Sherman Antitrust Act(1890) into the modern age.  When these laws were first created in England they mainly focused on food, those who monopolized food, for obvious reasons had to be prosecuted.  With technology growing as it is we can assume that more computer based antitrust lawsuits are in the near future.  “The real thing we want is a competitive marketplace where all kinds of innovation can thrive”(Wilcox, 2000), this statement can be viewed as the staple of The Sherman Antitrust Act(1890) in the computer age.  As newer technologies are developed a certain fairness should exist in the market-place to allow equal competition in business, hopefully these laws that were created in the early 1900’s can keep up with today’s ever evolving computer market.

            Diversity in the market-place is what The Sherman Antitrust Act(1890) set out to gain, after the settlement of the Microsoft antitrust case we can see the effects it has had on the internet browser market-place.  When one is to look at browser trends from the time the case was being held/concluded we can see that Microsoft dominated the browser market-place, in November 2002 Microsoft’s Internet explorer was the most widely used browser at 83%(Web Statistics and Trends, 2010). Currently as of February 2010 Microsoft’s Internet Explorer only averages 35%(Web Statistics and Trends, 2010) of internet browser usage.  Before settling on the antitrust lawsuit, Microsoft had the internet browser market cornered since the early 1990’s, maintaining up to 83% usage up through the year 2002 when the case was settled.  Almost immediately after settlement it is apparent that Microsoft’s dominance in the browser market was on the decline, after 15 years on top, in a matter of 5 years Microsoft’s reign on the top was over as Firefox took over as the number one internet browser with 46.5%(Web Statistics and Trends, 2010) of the market compared to Microsoft’s 35%(Web Statistics and Trends, 2010).  After viewing the statistics it is easy to see that the antitrust lawsuit played a vital role in Microsoft’s fall from internet browser grace.

            In the end, we can see that antitrust lawsuits have a significant economic impact, this is displayed perfectly in the case of The United States VS. Microsoft Corp.  The stock value of Microsoft plunged as the case was being tried, some estimate a net loss of “$70 billion”(Wilcox, 2000), this was sure to send a message to other companies who were possibly walking the line of antitrust laws.  The impact of this case on the diversity of the internet browser market was also significant, Microsoft is no longer the leading internet browser, despite it still being bundled with its Windows operating software.  In conclusion I believe we all owe thanks to The Sherman Antitrust act(1890) for placing punishments on companies who chose to monopolize their particular industry, this is no doubt creates a fair competition between all businesses.

References

1.  Wilcox, J. (April 3, 2000). Judge rules Microsoft violated antitrust laws. Retrieved         from http://news.cnet.com/2100-1001-238758.html

2.  The Columbia Encyclopedia, Sixth Edition Copyright© 2004, Columbia University      Press. Licensed from Lernout & Hauspie Speech Products N.V. All rights reserved

3.  NC State University. (n.d.) Antitrust: An Overview. Retrieved from             http://ethics.csc.ncsu.edu/commerce/antitrust/study.php

4.  W3schools. (February, 2010) Web Statistics and Trends. Retrieved from

            http://www.w3schools.com/browsers/browsers_stats.asp

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