...States sued Microsoft, alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. 1, 2. After trial, the court found Microsoft had violated Section 2 by unlawfully maintaining its monopoly in the market for Intel-compatible PC operating systems ("OSs") and by unlawfully attempting to monopolize the market for internet browsers, and that it had violated Section 1 by illegally tying its Windows operating system and its Internet Explorer ("IE") browser. The court ordered Microsoft to submit a plan of divestiture that would split the company into an OS business and an applications business, and ordered interim conduct restrictions. Microsoft, 253 F.3d at 45.” (Weil & McMillan, 2003). The Sherman Antitrust Act prohibits agreements, contracts, combinations, and conspiracies that result in inhibiting or restraining free trade. The act is very broad and can include relationships or agreements that result in price fixing. The Act attempts to either prevent monopolies or break up a monopoly that has been created. Antitrust statutes can be enforced by the federal government through the U.S. Attorney, Federal Trade Commission, through the attorney general of each state, or by individual action. The antitrust provisions of the Sherman Antitrust Act have been used against the railroad industry, the major oil companies, telecommunications, and more recently companies in the high tech industry such as Microsoft. (Mallor, et. al., 2010). Issues: Did Microsoft maintain a monopoly...
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...| Why was Microsoft Investigated for Antitrust Behavior? Karen Elmore ECON 312 Professor Guerman Kormilov Devry University Microsoft is a very large and diverse computer software company. It was investigated for antitrust behavior after there were reports that Microsoft was abusing their position as the leading supplier of computer operating systems. Lawmakers investigated to see if Microsoft was trying to create a monopoly of the computer software market. They found that Microsoft was trying to cause a monopoly in the computer industry. Here are the facts that support their findings. Microsoft developed Microsoft Office products that catered to the needs of professional in all types of fields, these products will only operate in a Windows operating system, which is a Microsoft system. When the early stages of the internet stared, Microsoft tried to push out and eliminate their competitors when it came to web browsing. It provided Internet Explore free of charge in all of their operating systems. This was at a time where people were being charged for AOL or Netscape Navigator. Microsoft was guilty of “exclusive dealing”. This is a regulation that gives them sole rights to a certain product. This prevented their competition from entering the market with their products. Microsoft used a pricing schedule which was a benefit for Windows users, but if you were on a different operating system products or services would cost more. This was often...
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...Antitrust Laws & Their Effects Jamar Averyhart Dr. Law Trine University In order to have a free economy you must have a competitive market place. A market that is open and stimulates the economy. This gives consumers whether they are organizations or just regular citizens the opportunity to purchase consumer goods at a relatively low price. As opposed to other economies that are not open markets, and that have one firm dominating the market place. Which drives up the price of consumer goods and make them unreasonably high. This is where antitrust laws come into play ("The Antitrust Laws," 2015). What are antitrust laws? Antitrust laws keep organizations from creating monopolies in industries, or colluding to drive up the price of items. If two major firms i.e. Apple and Microsoft were to merge. They control a large majority of the marketplace in the computer industry. This merger would lead to a shift in the price of computer and computer technology. It would create unequal competition and drive many other firms out of business. With the resources and consumer base that both companies have they would be able to dictate the prices in the industry and not have to rely on consumer demand and market trends. The first ever antitrust law was passed in 1890 which was the Sherman Act ("The Antitrust Laws," 2015). The Sherman Act made it illegal to try to form a monopoly, have a monopoly, or plan to have one. ("The Antitrust Laws," 2015) With the Sherman Act violating any...
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...18. May 2012 Final Journal Topic: Monopoly and Antitrust The market power of either buyers or sellers, harms buyers who may have the opportunity to buy at competitive prices. It also reduces the production, which causes a deadweight loss. Excessive market power also raises issues of equity and justice, because if a company has too much monopoly power, it makes profit at the expense of consumers. A monopoly is a situation in which there is a single supplier or seller of a good or service for which there are no close substitutes. Economists and others have long known that unregulated monopolies tend to damage the economy by (1) charging higher prices, (2) providing inferior goods and services and (3) suppressing innovation, as compared with a competitive situation (i.e., the existence of numerous, competing suppliers of the good or service).[1] In theory, the Government or State could collect the excess profits that the company obtained through taxes and then redistribute it among the buyers of the product. However, this redistribution is usually not feasible. It is difficult to ascertain what proportion of the profits of an enterprise is attributable to monopoly power and it is even more difficult to locate all buyers and reimburse them an amount proportional to their purchases. How can society, then, limit the market power and prevent the anti-competitively use of it? In the case of a natural monopoly, i.e. an electricity/power...
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...THE STATES SIDE Microsoft has clearly mistreated monopoly influence in its usage of its operating system. The fact that Microsoft bundled Internet Explorer with its Windows system without a doubt gave them an advantage over the web browser market; given that many businesses, households and even PDA computers have the Window Software. Microsoft made other web browsers slow even over a modem. To give them a way out of monopolistic illegal practices they included other web browser logos on the windows Operating System, but these other browsers would not work properly or became slow to use. “They manipulated and altered its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers’. (Wikipedia.org) Microsoft could have made Internet Explorer a separate entity and did not need to be tied into Windows. Take the separate version for Mac OS for example, Mac OS works off a different operating system, but also has access to Internet Explorer. It has also been said that Microsoft also required PC manufacturers to contain its internet browser as an element of setting up the Windows System. Microsoft stated that Internet Explorer was free to all windows users, however we can only assume that the price of Windows Operating System was overly priced or prices were kept high to cover the cost of development and marketing for Internet Explorer; so in the end it may not have been free at all. (Wikipedia.org) During questioning, guilty was the only...
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...Gaining Familiarity Microsoft was founded as a partnership between Bill Gates and Paul Allen in Albuquerque New Mexico in 1975 and incorporated in 1981. Product: Microsoft develops, manufactures, licenses and supports a wide range of software products and computing devices. Software products: Scalable operating systems for servers, personal computers, intelligent devices, server applications software development tools Customers: Consumers,Small and medium sized organizations, enterprises, educational institutions, ISPs, application developers and original equipment manufacturers (OEM) Consumers: individuals in businesses, government agencies, educational institutions, Distribution: OEM licenses, organizational licenses, online services and products, retail packaged products Geographic sales and marketing regions: South Pacific and Americas region; Europe, Middle East, and Africa region; Asia region Business strategy: Development of a broad line of software products for information technology professionals, knowledge workers, developers, and consumers, marketed through multiple channels of distribution Competitors: Microsoft competitors are primarily in the Development Tools, Operating Systems & Utilities Software industry. Microsoft also competes in the Accounting & Finance Software, Collaborative Software, and Content & Document Management Software sectors. Competitors include: IBM, Sun Microsystems, Oracle, AOL-Time Warner, Apple, Corel ...
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...United States v. Microsoft is a question of whether antitrust laws were violated. Microsoft was being accused of having a monopoly, which is illegal all by itself, but also of employing anticompetitive techniques to keep the competition at bay. Microsoft would use techniques or threats against any company that threatened to take consumers away from Windows. One example was when Microsoft threatened to end Compaq’s license for Windows 95 if they did not restore the Windows and MSN icons back to their original positions. Microsoft was using licensing for the Windows operating system as leverage to get other companies to act accordingly. This was only one of the various ways that Microsoft controlled the market. In response, Microsoft said that...
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...preferences for the amount of reported earnings, so when the rules provide some latitude they can be expected to exercise judgment in a fashion that reflects those preferences. In addition, when there are rules that provide explicit revenue recognition guidance, managers sometimes knowingly or unknowingly violate them. Not surprisingly, approximately 60 per cent of all accounting malfeasance involves revenue recognition issues. Revenue recognition is particularly important in the software industry, because the comparatively low marginal cost of servicing an additional software sale implies that an additional dollar of recognized revenue goes almost entirely to the “bottom line” of the Income Statement – i.e., almost straight to earnings. Microsoft Corporation dominated the world software market for several decades. This has allowed the company to make substantial profits over an...
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...IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) NETSCAPE COMMUNICATIONS ) CORPORATION, ) 466 Ellis Street ) Mountain View, California, ) ) Plaintiff, ) ) v. ) ) MICROSOFT CORPORATION, ) One Microsoft Way ) Redmond, Washington, ) ) Defendant. ) ) ____________________________________ ) Civil Action No. _____ JURY TRIAL DEMANDED (Per Local Civil Rule 40.5, Related to Civil Action Nos. 98-1232 and 98-1233) COMPLAINT This action follows the determination of Microsoft Corporation’s (“Microsoft”) antitrust liability in United States v. Microsoft, Civil Action Nos. 98-1232 and 98-1233, unanimously affirmed by the Court of Appeals, where it was found that Microsoft’s illegal acts had “inflicted considerable harm on Netscape’s business.” Netscape Communications Corporation (“Netscape”) thus brings this action against Microsoft to prevent further injury to Netscape, to restore competition lost in the market for Web browsers, to foster competition in the market for operating systems, and to receive treble damages compensation for the harms inflicted upon it by Microsoft. Netscape seeks this relief under Sections 1 and 2 of the Sherman Act, sections 28-4502, 4503, 4508, and 4510 of the District of Columbia Code, and under the common law, for harm resulting from Microsoft’s anticompetitive conduct in the markets for Intelcompatible personal computer (“PC”) operating systems and Web browsers worldwide. Plaintiff alleges as...
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...investigated for antitrust behavior? 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. 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 plaintiffs alleged that Microsoft abused monopoly power on Intel-based personal computers in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to...
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...If not, why not? So the question asks if the several laws that the United States has to further fair, balanced, and competitive business practices are effective. My opinion not so much. There are many big companies out there that have stepped out of line and because they have good lawyers they are able to break those laws without getting penalized. However there are those occasions that those laws actually help out. One example is the Antitrust Law. Also referred to as "Competition Laws" - are statutes developed by the U.S. Government to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market economy. One particular company that plays with these laws is Walmart. Walmart has many stores throughout the country and for many people it is the only store that has what they need. It is the one stop shop for many people in the Midwest. They have taken over towns and cities promising to not harm small shops and to give back to the people and it communities. Walmart is using the antitrust law in in Europe so that they can be in Europe and be that Monopoly. So with that being said Walmart is very familiar with such law. Another example of this company playing with this law is with Coka-Cola. Coka-Cola had a product they were going to release in America however in this new product Walmart did not like one ingredient so they refused to sell the product. Walmart accounts for 30% of sales in this country so Coka-Cola had no choice...
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...I have chosen to write on antitrust laws. Antitrust laws enable a free market to thrive and flourish without the fear of monopolization. Monopolization in itself isn’t a bad thing. There are naturally occurring monopolies like public utilities and when a firm is the only producer of a particular good or service. This single firm or company because the scale of economies is so large that they can supply the entire market at a lower cost than any other competing firm could. Monopolies become a problem when a firm or corporation is the only producer selling a particular good or service, this monopoly wills tend to produce fewer products at a high price. This meanwhile is not productive of a free market. The antitrust laws that are in place today came about from the Sherman Act of 1890. This act was created when the public grew resentfully of the trusts that emerged in the 1870’s and 1880’s. The Sherman Act states that “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among several states, or with foreign nations is declared to be illegal.” This surprising short sentence is the cornerstone for our antitrust laws today. The Sherman Act basically outlawed restraints of trade, meaning anything that would restrain the flow of free trade. This gave a firm foundation for new and current business to enter into the market place; there would be no fear that they would be pushed out of the market either by price-fixing or collusion...
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...Google Antitrust Investigation Google is an American corporation specializing in internet search. Google was founded by Larry Page and Sergey Brin while they were doctoral students at Stanford University in the mid 1990's. The company has been estimated to run more than one million servers in data centers around the world and process over one billion search request each day. The company's perceived monopoly and market dominance let to media coverage accusing the internet giant of not only copyright issues, but censorship and privacy violations as well. However, despite these accusations, Google.com was reportedly the most visited website in 2013 (Savitz & Cooper, 2012). Google's critics claim that it unfairly utilizes its search engine to advance its own services over their competitors. Companies with no ties or google affiliations claim that, “Google engages in anti-competitive behavior across many vertical categories of search that harms consumers by restricting the ability of other companies to compete or put the best products in front of Internet users, who should be allowed to pick winners and losers online, not Google” (Savitz & Cooper, 2012). Google has fired back to these allegations by claiming that search users are easily able to locate other service providers and that their website is built for users and not for websites. Ironically, Microsoft was the company who originally launched the initial claims regarding Googles online practices. Many people remember...
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...Ethics and Social Responsibility at Microsoft This section opens up by covering all the ways Microsoft has contributed to what the author has claimed to be a “positive reputation”. It covers everything the company has done to give back to society and how the company prides itself on its ethical standards, antitrust compliance and responsible competition. Microsoft is even quoted in the case that “it is committed to responsible and sustainable business practices that consider the social and environmental consequences of its actions”, but this after a decade of ethical and legal problems stemming from antitrust issues and several patent infringement complaints. The question is, would Microsoft have such a “positive reputation” today if we didn’t have the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914 and if the Federal Trade Commission never began investigation Microsoft back in the early 1990s. Legal Issues Impacting Microsoft In the United States, Courts have held that a market share below 50% precludes finding monopoly power, and the leading treatise suggests that a share of over 70-75% for at least five years is required. While the law in the US allows creation of a monopoly, the courts have interpreted this to mean that monopoly is not unlawful “per se”, but if acquired through what the courts consider prohibited conduct, then it is unlawful. The Supreme Court also says, that a monopoly may engage in practices that any company...
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...Microsoft Faces Large EU Fine Summary The European Union (EU) continues on its path of not being very popular with outside countries. Recently, the EU filed a formal complaint against Microsoft Corp. for failing to keep a promise that was made three years ago. Microsoft was supposed to offer alternative web browsers in the newest version of Windows for users in Europe. This is not the first time the EU has had an issue with Microsoft, and I do not think it will be the last. Discussion The formal complaint filed against Microsoft could result in maximum fine of as much as 10% of its total annual revenue, or $7.4 billion. I think this amount is excessive for what Microsoft has done. I do not believe the EU should penalize Microsoft at all. It is far too easy for users to download an alternative web browser. The EU’s antitrust chief Joaquin Alumina said that this case is being used as a deterrent to other firms. “This is a very serious message not to infringe the commitments that had been agreed," Mr. Almunia said." Companies should be deterred from any temptations to renege on their commitments or even neglect their duties," he said. He essentially is saying that Microsoft is being used as an example of what not to do. In my opinion, this is not the case to use to prove your point. No one has been harmed by what Microsoft has done. The EU is now in negotiations with Google Inc. on ways to address concerns about its dominance of Internet search and online advertising...
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