United States V Microsoft: a Case for Antitrust Ethics Courses
United States v Microsoft: a Case for Antitrust Ethics Courses
Eva Marie Cole
BUS 670
Prof. Troy Tureau
October 17, 2011
United States v Microsoft: a Case for Antitrust Ethics Courses
In 1994, Microsoft Corporation was sued by the Department of Justice on behalf of the United States for violating §2 of the Sherman Act “…by engaging in monopolization through a series of exclusionary and anticompetitive acts designed to maintain its monopoly power” (Mallor, Barnes, Bowers, & Langvardt, 2010, p. 1275, para 3). More specifically, the company was charged with, among other things, violating the Act by 1) attempting to monopolize the Web browser market, 2) tying its Internet Explorer (IE) browser application to its Windows operating system (OS), and 3) “unlawfully maintaining a monopoly in the operating system market through anticompetitive terms in its licensing and software developer agreements” (United States v Microsoft, 2001). Although some of the Supreme Court’s decision was reversed by the Court of Appeals, the prior decisions regarding these three primary claims were affirmed – and rightly so.
Perhaps the most serious charge is monopolization. Monopolization is illegal under § 2 of the Sherman Act. According to the Supreme Court, any entity that can control market prices or exclude competitors wields monopoly power “…may be inferred from a firm’s possession of a dominant share of a relevant market that is protected by entry barriers” (Mallor et al., 2010, p. 1275, para 7). After defining the market, the Court determined that consumers could not easily (nor economically) replace their Windows-based OS computers in the event of a significant price increase by Microsoft (United States v Microsoft, 2001). Additionally, when looking at the relevant market, Windows accounted for more than 95 percent of the market share (United States v Microsoft, 2001). Lastly, the court concluded there are barriers to entry into the market (e.g., consumers prefer
Eva Marie Cole
BUS 670
Prof. Troy Tureau
October 17, 2011
United States v Microsoft: a Case for Antitrust Ethics Courses
In 1994, Microsoft Corporation was sued by the Department of Justice on behalf of the United States for violating §2 of the Sherman Act “…by engaging in monopolization through a series of exclusionary and anticompetitive acts designed to maintain its monopoly power” (Mallor, Barnes, Bowers, & Langvardt, 2010, p. 1275, para 3). More specifically, the company was charged with, among other things, violating the Act by 1) attempting to monopolize the Web browser market, 2) tying its Internet Explorer (IE) browser application to its Windows operating system (OS), and 3) “unlawfully maintaining a monopoly in the operating system market through anticompetitive terms in its licensing and software developer agreements” (United States v Microsoft, 2001). Although some of the Supreme Court’s decision was reversed by the Court of Appeals, the prior decisions regarding these three primary claims were affirmed – and rightly so.
Perhaps the most serious charge is monopolization. Monopolization is illegal under § 2 of the Sherman Act. According to the Supreme Court, any entity that can control market prices or exclude competitors wields monopoly power “…may be inferred from a firm’s possession of a dominant share of a relevant market that is protected by entry barriers” (Mallor et al., 2010, p. 1275, para 7). After defining the market, the Court determined that consumers could not easily (nor economically) replace their Windows-based OS computers in the event of a significant price increase by Microsoft (United States v Microsoft, 2001). Additionally, when looking at the relevant market, Windows accounted for more than 95 percent of the market share (United States v Microsoft, 2001). Lastly, the court concluded there are barriers to entry into the market (e.g., consumers prefer