Microsoft Software Products To Microsoft's Windows example essay topic

Antitrust laws protect competition, which is said to benefit consumers with better products at lower prices. The U.S. Department of Justice (DOJ) and attorney generals from 20 states has filed antitrust lawsuits against Microsoft Corporation (Microsoft), the world's largest supplier of computer software for personal computers (PCs) in the United States. Microsoft is accused of allegedly violating sections 1 and 2 of The Sherman Antitrust Act of 1890. Section 1 of the Sherman Act outlaws "every contract, combination... , or conspiracy, in restraint of trade. ' The Supreme Court has since then decided that the Sherman Act prohibits only those contracts or agreements that restrain trade unreasonably.

What kinds of agreements are unreasonable is up to the courts. Section 2 of the Sherman Act makes it unlawful for a company to 'monopolize, or attempt to monopolize,' trade or commerce. As that law has been interpreted, it is not necessarily illegal for a company to have a monopoly or to try to achieve a monopoly position. The law is violated only if the company tries to maintain or acquire a monopoly position through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete. The DOJ feels that Microsoft has a monopoly in the field of personal computer operating systems (OSs) and that they are engaging in anti competitive conduct. Microsoft's 'Windows' operating systems are used in over 80% of PCs.

More than 90% of new PCs are shipped with a version of Windows pre-installed. According to the DOJ,' PC manufacturers have no commercially reasonable alternative to Microsoft operating systems for the PCs that they distribute. ' Other firms do exist in the operating system market for example, IBM, Oracle, Sun Apple, AT&T, Hewlett Packard, Wang, Be, Linux, Dec, Gem, and others. These firms may only have 10-20% of the market share for PC's operating systems but they do have some share of the market. This proves that Microsoft is not the only seller of operating systems as the DOJ claims. The DOJ's complaint states that, 'To protect its valuable Windows monopoly against potential competitive threats, and to extend its operating system monopoly into other software markets, Microsoft has engaged in a series of anti competitive activities.

Microsoft's conduct includes agreements tying other Microsoft software products to Microsoft's Windows operating system; exclusionary agreements precluding companies from distributing, promoting, buying, or using products of Microsoft's software competitors or potential competitor; and exclusionary agreements restricting the right of companies to provide services or resources to Microsoft's software competitors or potential competitors. ' The DOJ claims Microsoft has engaged in predatory (pricing) conduct by giving away its Internet Explorer browser. Predatory pricing is an exclusionary act by which a firm, in order to create or maintain a monopoly power, lowers its prices below the profit maximizing level in order to push rival firms out of the market or prevent them from ever entering the market. In the long run, this results to be a detriment to consumers. Once the competition has left the market, the companies can then raise prices to a competitive level and recoup the losses suffered by predatory pricing.

This results in higher prices for the consumer.