Antitrust Laws with Ms

Antitrust laws have been established by the government to prevent monopolies from overpowering the economy under a belief that the economy functions best when competition among firms exist. The laws were set forth to protect consumers from being forced to overpay for products by large corporations preventing competition. They limit abuses of economic power to preserve competition and protect consumers. Whom does the antitrust policy protect?

Sherman Act. The act, based on the constitutional power of Congress to regulate interstate commerce, declared illegal every contract, combination (in the form of trust or otherwise), or conspiracy in restraint of interstate and foreign trade. A fine of $5,000 and imprisonment for one year were set as the maximum penalties for violating the act.

In 1914, a new act was passed by lawyer Henry De Lamar Clayton of Alabama and was called the Clayton Antitrust Act. It aimed to re-enforce the Sherman Act by giving the government more power when faced with monopolies. It strictly outlawed companies to engage in price-fixing agreements and lessen competition. The act also disallowed individuals to serve as directors at competing companies. (investopedia.com)

Government

The government noticed Microsoft’s (MS) strong-arm tactics to remain the lead web browser among the internet world after a small software company (Netscape) accused MS of unfair competitive practices. The government was able to present evidence of anticompetitive activities by MS. They were conspiring to monopolize the market and control it from anyone else entering the market place. MS both has illegally maintained its existing operating system monopoly and has attempted to extend that monopoly into other products, and has violated Section 1 of the Sherman Act as well (U.S. vs. Microsoft Corporation, sec. II para. 3). These tactics contradicted the government’s antitrust policy to promote a free market.

Netscape Communications Corporation had created an Internet browser for the newly emerging World Wide Web. At the time, MS had no such product in its repertoire, but could see the burgeoning popularity of the Internet and quickly introduced its own browser. When Microsoft began bundling its browser in with its Windows software, which people have to buy to run their computers, they were effectively giving away the product. Netscape charged that the tactic amounted to an unfair advantage, and the complaints led to an investigation, which eventually led to the antitrust suit filed by the U.S. Department of Justice and 20 states on May 20, 1998.

There was several evidence to justify that MS was indeed attempting to illegally monopolize the market. There was surmounting evidence that proved that MS used its market power to restrict other powerful competitors from developing their own software. Intel and Apple (both powerful agencies) were pressured by MS to take actions directly to disadvantage and foreclose Netscape and to reduce the competitive threat posed by Java (U.S. vs. Microsoft Corporation, sec. II para. 4). MS engaged in anticompetitive conduct as they began to perceive Netscape as a threat; MS aligned themselves with Intel and Apple to bog Netscape down and prevent the development of Java.

MS has proved to act anti-competitively by using its market power and profits to prevent other firms who insist on pursuing initiatives that could intensify competition against one of Microsoft's core products such as Netscape. MS was successfully attempting to monopolize the market preventing others from competing and not allowing the average consumer to choose freely from other competitors thus giving MS market power allowing them to control the market.

Microsoft

The government alleged Microsoft (MS) abused its monopoly power by bundling Internet Explorer (IE) web browser with MS Windows operating system, which unfairly restricted the market for competing web browsers such as Netscape. Licensing agreements of MS’s processor and operating software is another reason why the government felt MS had too much influence with independent software vendors. It further alleged that MS altered or manipulated its application-programming interface (API) to favor its own web browser (Internet Explorer)