The Microsoft Antitrust Law Suit

Recently one of the biggest corporations in the United States, Microsoft had to face several ultimatums from the government. The case against Microsoft was brought by 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 software market. The Department of Justice launches an investigation of Microsoft, looking into whether they have forced computer makers to take Internet Explorer.

The proposed remedy against Microsoft marks the first time that the government has tried to break up a major corporation since the Bell System telephone monopoly was divided into eight companies in 1984. If the breakup becomes a reality, it could cause significant shifts in the dynamics of the computer and software industries. Securities analysts are unclear about how it would impact the software giant's current $356 billion market value. Microsoft is estimated to have an 82 percent share of the market for personal computer operating systems and a 94 percent share of the market for office applications, such as word processing and spreadsheets. The company has become so dominant in those two markets that its revenue growth rate has started to slow dramatically from its average over the past five years.

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 predatory actions. Many people feel that Microsoft is only taking advantage of its position in the market and using marketing strategies to attract new customers. They have chosen to implement a market development strategy to attract new customers, who are looking for a system that has Internet capability.

Microsoft feels that by integrating their Internet Explorer web browser technology into Windows, they are only improving its functionality available to the customer. Some people, especially the judge, say that Microsoft began its illegal agenda when it began requiring PC manufacturers to sign a license agreement that said that, if they were going to have Windows preinstalled on their new systems, that the Windows Internet Explorer must also be installed. Although it is possible for consumers to install other browsers onto Windows and use them, critics say that Microsoft still has an unfair advantage. It also keeps other browser companies from being able to consult with PC manufacturers to put their browser on the PC from the beginning. When Netscape refused to bow before Microsoft, Microsoft decided to do everything in their power to limit the amount of resources that Netscape could access.

Microsoft contested the district court's finding that the company had illegally tied its Explorer Web browsing software to its Windows operating system, preventing Netscape's Navigator browser from competing effectively in the market. Microsoft said that the Justice Department's "tying" claim fails for two reasons. First, Windows and Explorer are not separate products because there are "significant benefits to the integrated design of Windows that cannot be duplicated by combining an operating system with a standalone Web browser like Navigator," the company said. Second, the alleged product tie didn't foreclose on competition in the browser market.

Their methods were often compared to those of Andrew Carnegie's of Carnegie Steel, in the early 1900's. When a competitor would come into town, he would lower his prices way below cost to drive the competitor