A battle has raged in the United States courts between the U.S. government and the Microsoft Corporation, headed by Bill Gates, since 1990. The federal government has maintained that Microsofts monopolistic practices are harmful to United States citizens, creating higher prices and potentially downgrading software quality, and should therefore be stopped, while Microsoft and its supporters claim that they are not breaking any laws, and are just doing good business.
Microsofts antitrust problems began for them in the early months of 1990, when the Federal Trade Commission began investigating them for possible violations of the Sherman and Clayton Antitrust Acts, which was designed to stop the formation of monopolies. After several years of investigation, in August of 1993, the FTC finally decided to hand the case over to the Department of Justice. The Department of Justice moved quickly, with Anne K. Bingaman, head of the Antitrust Division of the D.O.J., leading the way. The case was finally ended on July 15th, 1994, with Microsoft signing a consent settlement. The settlement focused on Microsofts selling practices with computer manufacturers. Up until now, Microsoft would sell MS-DOS and Microsofts other operating systems to original equipment manufacturer (OEMs) at a 60% discount if that OEM agreed to pay a royalty 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 with other operating systems. 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, thus eliminating any chance for another operating system vendor to get their system installed until the retailer had installed all of the Microsoft operating systems that it had to sell. In addition to specifying a minimum number of operating systems that a vendor had to buy, Microsoft also would sign contracts with the vendors for long periods of time such as two or three years. In order for a new operating system to gain popularity, it would have to do so quickly, in order to show potential buyers that it was worth purchasing. With Microsoft signing long term contracts, they eliminated the chance for a new operating system to gain the popularity needed.
The second issue that Microsoft had to face was when they were accused of tying.Tying is the practice in which Microsoft would use their leverage in one market area, such as graphical user interfaces, to gain leverage in another market, such as operating systems, where they may have stiff competition. In the preceding example, Microsoft would use their graphical user interface, Windows, to sell their operating system, DOS, by offering discounts to manufacturers that purchased both MS-DOS and Windows, and threatening to not sell Windows to companies who did not also purchase DOS. In the end, Microsoft decided to suck it up and sign the settlement agreement. In signing the agreement, Microsoft did not actually have to admit to any of the alleged charges, but were able to escape any type of formal punishment such as fines and the like. The settlement that Microsoft agreed to prohibits it, for the next six and a half years from: Charging for its operating system on the basis of computer shipped rather than on copies of MS-DOS shipped, imposing minimum quantity commitments on manufacturers, signing contracts for greater than one year, tying the sale of MS-DOS to the sale of other Microsoft products.
Although these penalties were placed to put an end to all of Microsofts evil practices, some people thought that they were not harsh enough and that Microsoft should have been split up to put a stop to any chance of them forming a true monopoly of the operating system market and of the entire software market. On one side of the issue, there are the people who feel that Microsoft should be left alone, at least for the time being. With Microsoft creating the standards for the rest of the computer industry, they are able to create better standards and build them much faster than if an outside organization or committee were to create them. With these standards set, other companies are able to create their applications and other products that are much faster, better, and thus the customers receive that much better of a product. Another conclusion that many anti-Microsoft people and other people around the world jump to is that the moment that we have a company such as Microsoft, who is very successful, they immediately think that there must be something wrong, that they have to be doing something illegal or immoral to have become this immense. Contrary to popular belief, Microsoft has not gained its enormous popularity through monopolistic and illegal measures, but instead through superior products.
One of the biggest proponents of government intervention into the Microsoft issue is Netscape Communications, based out of Mountain View, California. Netscape filed lawsuits accusing Microsoft of tying. This time, Microsoft started bundling their World Wide Web browser, Internet Explorer 3.0, into their operating system, Windows 95. Netscape is the maker of Netscape Navigator, which was the most widely used Internet browser on the market at this time. Netscape says that in addition to bundling the browser, Microsoft was offering Windows at a discount to original equipment manufacturers (OEMs), to feature Internet Explorer on the desktop of the computers that they shipped, thus elimination any competition for space on the desktop by rival companies such as Netscape. If the OEM wants to give the consumer a fair and even choice of browser’s by placing competitors browser icons in a comparable place on the desktop.
The most recent events in the case against Microsoft is that the government is rumored to be working on a proposal that would force Microsoft to open up its source code and sell a stripped down version of Windows. There is also expected to be a limited or complete ban on bundling of Microsoft products. If they are forced to release their code, this will make it so anyone can change Windows to suit their needs. It will also benefit companies such as Sun Microsystems, Apple Computers, and distributors of Linux. Opening the Windows code will allow these companies and many others get inside the Windows code and see exactly how its gears turn. They will be able to create operating systems that are branches of Windows that run in a way that best fits their needs, all at Microsofts expense. This will also create havoc in the entire software industry with everything from business applications to video games. When there is a superior product, everyone else will want to know how it works and sue to find out their secrets.
With all the information that has been presented for both sides of the issue, you are probably left in a daze, not knowing what to think. Is Microsoft good or is Microsoft bad. Well, I would have to say a little of both. Even though the Justice Department found that Microsoft might be practicing some techniques that are less than ethical, they did not find that Microsoft was breaking any anti-trust laws, nor did Microsoft admit to the accusations when they signed the agreement. If anything, when they signed the agreement, it was more of a sorry than a full-fledged admission of guilt, but they continue to get hammered upon and probably will be for a long time.
Anti Trust Case Filings. http://www.usdoj.gov/atr/cases/ms_index.htm.
Microsoft PressPass. Microsoft Corporation.
Nader, Ralph. Consumer Harm in the Microsoft Case.
Seltzer, Larry. Open source, standards, and Windows. Jan. 17, 2002.
Seltzer, Wendy. http://cyber.law.harvard.edu/msdoj/archive.html.
US vs. Micorsoft: The Appeal, CNN.
US vs. Microsoft, Washington Post.
Wilcox, Joe. States get tough in Microsoft Case. Jan. 7, 2001, CNET News.