Microsoft’s Antitrust Battle

Bill Gates and his company prosecuted many individuals and companies for software theft to show the world that intellectual property cannot be stolen without punishment. In 1998 Gates noticed that there was a huge gap between the number of computers being sold each year and the number of computer software. He quickly realized that many people were stealing computer software online. Gates knew that using computer software without paying was illegal and he intended to make everyone that stole their software pay the price for their crime. When Microsoft first discovered that their software was being stolen they decided that if people were going to steal software then they should steal Microsoft’s software and eventually Gates would find a way to collect money from his stolen property. Microsoft went after over 80 companies that they discovered were using their computer software without purchasing it and they pressed legal action and in the end got the money they had earned (Down to Earth). Before Microsoft prosecuted these companies for illegally downloading software, stealing intellectual property online was not considered important and legal action was almost never taken against those who committed the theft. Thanks to Bill Gates and his company intellectual theft is now taken

According to the Department of Justice, Microsoft used its resources and technology to drive other companies out of business, thereby eliminating the competition and creating a monopoly. Without competition, Microsoft was able to set prices and consumer conditions in a way that exceedingly benefited the company while ensuring a decreased amount of new competition because of the proprietary software installed in most PCs. (Competitive Processes, Anticompetitive Practices and Consumer Harm in the Software

The Justice Department maintains that the most critical concern involved Microsoft’s agreement to license a code to other companies, which allows rival products to communicate with Windows software. As of January 17, 2004, only eleven companies have chosen to license this code, most of which are not much competition for Microsoft. In addition, many companies are accusing Microsoft of demanding unreasonable fees and tedious restrictions for the code license (Krim, 2004).

United States vs. Microsoft is one the largest, most controversial antitrust lawsuits in American history. Many claim the government is wrongly punishing Microsoft for being innovative and successful, arguing that Windows dominates the market because of the product’s popularity, not because of malpractice by the parent company. Others argue in favor of the government, claiming that Microsoft’s practices conflict with the free market ideal. There are many arguments for both sides of the lawsuit, but what the case really comes down to is this: does the government have the right to interfere in today’s marketplace? Or is Microsoft violating laws that are rightfully imposed by the government?

Even with this publicly ethical image, Microsoft has been mired in litigation since 1990, and has paid billions of dollars in legal settlements and fees to address allegations of anti-competitive business practices. Hollywood even jumped on the bandwagon with the 2001

On July 15, 1994, the United States sued Microsoft for unlawfully maintaining its monopoly in the market for PC operating system software. The lawsuit alleged that Microsoft engaged in anti-competitive marketing practices directed at PC manufacturers that distributed Microsoft operating system software preinstalled on its PCs. Microsoft began to levy fines against original equipment manufacturing (OEM) companies who distributed or promoted operating systems other than Microsoft. On August 21, 1995, Microsoft "consented" to a "Final Judgement" against them.

The government has been looking into Microsoft since 1990, when the Federal Trade Commission first started examining charges of monopolistic behavior. In 1995, Microsoft and the U.S. Justice Department reached a settlement that required the company to change a variety of business practices, including key aspects of its licensing agreements with personal computer makers (2).

DOJ was not persuaded by Microsoft's argument that physical machines can more easily be counted than intangible copies of computer software. Nor was DOJ convinced that customers might actually favor long-term contracts to guard against unpredictable price increases and other uncertainties. This raised the question; did Microsoft exploit its dominant market position by "insisting" on "unfair" licensing arrangements? Of course not. Consider that Windows became the industry standard because PC-makers thought it was a "superior" product. An assessment that surely took into account the entire set of product features, not only technical features but also ease of use, quality, price, service, and contract terms. Just like any other product in the competitive market. Consider that there were no barriers that would prevent another competitor from driving Windows out as being the market leader. These are simple conditions that exist in an economic market. Those considerations, apparently, did not impress the DOJ's Antitrust Division.

Commencing in 1990, Microsoft was investigated and then charged with violation of the Sherman Antitrust Act which governs United States businesses. The company was determined to be a monopoly, and one which used anti-competitive practices to keep its leading edge on the market. As would most any organization on the receiving end of the allegations, Microsoft did not agree with the charges and sought to defend its business

The case against Microsoft was brought buy the U.S. Department of Justice, as well as several state Attorneys General. Microsoft is accused of using and maintaining monopoly power to gain an unfair advantage in the market. The case has been under observation for a long time, but the Justice department is having trouble coming up with substantial evidence against Microsoft. Specifically, the Department must prove:That Microsoft has monopoly power and is using it to gain unfair leverage in the market.And that Microsoft has maintained this monopoly power through "exclusionary" or "predatory" acts(Rule).Some say that Microsoft is only taking advantage of its position in the market and using innovative marketing strategies

95% share…court also found that even if Mac OS were included, Microsoft’s share would exceed 80%” (United States Court of Appeals).

Microsoft is a highly diversified company. Its technologically-related products span from software to music players to game consoles to web browsers to search engines to phones. However, its flagship product, the product which has been the primary driver of its profits has been Microsoft Windows, the ubiquitous operating system that runs on virtually every computer in the world. Windows has been deemed so critical that even Microsoft's competitor Apple was effectively forced by market pressures to allow its Macs to run Windows, in an effort to boost sales. "As astounding as Apple's success has been, it hasn't put a dent in the Microsoft Office monopoly. [Current CEO] Ballmer and company still profit on every Macbook running Word, Excel and PowerPoint" (Greg 2012).But while Microsoft continues to make its highly profitable Windows products (despite industry criticism about its user features); it has struggled to diversify in its many critical areas, most notable in its music, phones, and Internet service.

Microsoft is one of America's top computer companies but, in 1999, it was accused of violating the law through the methods it used to promote its internet browser, "Internet Explorer." The case against Microsoft was brought about by the government and claimed that Microsoft was in violation of the Sherman Act, a law designed to fight monopolies. When that case was finally decided, and it was found that Microsoft had indeed broken U.S. law, a competitor, AOL Time Warner, then filed a civil suit claiming damages from the illegal activities of Microsoft. As a result of the civil suit, Microsoft agreed to pay AOL Time Warner $750 million, as well as allow AOL to use Internet Explorer free of charge for seven years.

Microsoft and its supporter’s claims that they are not breaking any laws, and are just

Considering that every computer manufactured in the United States and the world has to have an operating system in order to work Microsoft appears to be dominant in this arena. The company has been so dominant over the years that back in 1998 in a complaint filed against Microsoft in the U.S. District Court of the District of Columbia on May 18, 1998, the Justice Department declares unequivocally that "Microsoft possesses (and for several years has possessed) monopoly power in the market for personal computer operating systems" (U.S. v. Microsoft Corporation 1998).