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    Microsoft

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    jobeerd
    The United States Department of Justice and 19 states sued Microsoft alleging that it illegally monopolized the market for PC operating systems and engaged in anticompetitive behavior to maintain its monopoly position. This included bundling its Internet Explorer browser with Windows and entering into exclusionary agreements with computer manufacturers and internet providers. The district court found Microsoft guilty on most counts and ordered the company be split into two. Microsoft argued in its defense that it was just competing hard and that consumers benefited from its actions, but the court ultimately ruled against Microsoft.

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    Microsoft

    Uploaded by

    jobeerd
    36 views2 pages
    The United States Department of Justice and 19 states sued Microsoft alleging that it illegally monopolized the market for PC operating systems and engaged in anticompetitive behavior to maintain its monopoly position. This included bundling its Internet Explorer browser with Windows and entering into exclusionary agreements with computer manufacturers and internet providers. The district court found Microsoft guilty on most counts and ordered the company be split into two. Microsoft argued in its defense that it was just competing hard and that consumers benefited from its actions, but the court ultimately ruled against Microsoft.

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    The United States Department of Justice and 19 states sued Microsoft alleging that it illegally monopolized the market for PC operating systems and engaged in anticompetitive behavior to maintain its monopoly position. This included bundling its Internet Explorer browser with Windows and entering into exclusionary agreements with computer manufacturers and internet providers. The district court found Microsoft guilty on most counts and ordered the company be split into two. Microsoft argued in its defense that it was just competing hard and that consumers benefited from its actions, but the court ultimately ruled against Microsoft.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views2 pages

    Microsoft

    Uploaded by

    jobeerd
    The United States Department of Justice and 19 states sued Microsoft alleging that it illegally monopolized the market for PC operating systems and engaged in anticompetitive behavior to maintain its monopoly position. This included bundling its Internet Explorer browser with Windows and entering into exclusionary agreements with computer manufacturers and internet providers. The district court found Microsoft guilty on most counts and ordered the company be split into two. Microsoft argued in its defense that it was just competing hard and that consumers benefited from its actions, but the court ultimately ruled against Microsoft.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Microsoft, a landmark case of antitrust intervention in network industries.

    The United States Department of Justice and 19 States sued Microsoft alleging (i) that it monopolized the market for operating systems of personal computers and took anti-competitive actions to illegally maintain its monopoly; (ii) that it attempted to monopolize the market for Internet browsers because such browsers would create competition for operating systems; (iii) that it bundled its browser (Internet Explorer) with Windows; and that it engaged in a number of other anti-competitive exclusionary arrangements with computer manufacturers, Internet service providers, and content providers attempting to thwart the distribution of Netscapes browser. The District Court Judge found in most points for the plaintiffs and ordered the breakup of Microsoft into two companies, one with all the operating systems software, and one with all other products of the company 1. Microsoft illegally monopolized the market for operating systems (OSs) for personal computers (PCs) under 2 of the Sherman Antitrust Act; 2. Microsoft had anti-competitive contractual arrangements with various vendors of related goods, such as with computer manufacturers (OEMs) and Internet Service Providers (ISPs), and had taken other actions to preserve and enhance its monopoly; that these contractual arrangements and other actions were illegal under 2 of the Sherman Antitrust Act; 3. Microsoft illegally attempted to monopolize the market for Internet browsers (but failed to succeed), an act that is illegal under 2 of the Sherman Antitrust Act; 4. Microsoft bundled anti-competitively its Internet browser, IE, the Microsoft Internet browser, with its Windows operating systems; that this is illegal under 1 of the Sherman Antitrust Act. Microsofts Defense Microsofts defense was as follows. First, Microsoft argued that the law was on its side since the Court of Appeals had ruled on June 23, 1998 that Microsoft can legally add new features and functions to Windows. Therefore Microsoft argued that it was legal to add IEs functionality to Windows, and it had done nothing wrong by integrating IE in Windows. Second, Microsoft argued that it was just competing hard against Netscape, that such competition was welfare-enhancing, and that it did not commit any anti-competitive acts. Third, Microsoft argued that it did not have monopoly power in the operating systems market. Fourth, Microsoft argued that competition in the software sector was intense and that its leadership position could be replaced at any time by a new competitor or entrant. Although this seems to have been a deeply held belief of Microsofts management (as revealed by the internal e-mails), its economics expert witness failed to convincingly articulate this Schumpeterian view in the context of an antitrust defense. Fifth, Microsoft argued that it is a leader in software innovation and that it has enhanced rather than hobbled the innovation process. Sixth, Microsoft argued that consumers have benefited from its actions rather than been harmed by them. Microsoft claimed direct consumer benefits from its low pricing of the operating system, the zero pricing of its Internet browser, and from its

    enhancement and acceleration of the innovation process. Microsoft also argued (rather ineffectively) that consumers benefit from the de facto standardization that its large market share brought to the operating systems market.

    To prove attempting to monopolize (under Sherman Act 2), plaintiffs have to prove that the defendant 1. Engaged in predatory or anti-competitive conduct 2. with specific intent to monopolize 3. and that there was a dangerous probability that the defendant would succeed in achieving monopoly power. It has generally been accepted in the application of antitrust law in the United States that anticompetitive acts harm consumers. Consumer harm or attempted harm is necessary for an antitrust violation. The affected consumer group may be present or future. Consumers may lose directly from high prices or indirectly through a limitation of choices of variety and quality or by a retardation of the innovation process. But without consumer victims or prospective likely victims, present or future, it is extremely hard to prove that an antitrust violation exists.

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