Anti-Trust Legislation Essay

As many people have noticed, recently there has been a huge focus in the mediaon Bill Gates, and his huge Microsoft Corporation. This past Friday, May 22,1998, a federal judge combined two lawsuits and set a trial date for September8, 1998. This trial date will address a government request for a preliminaryinjunction concerning Windows 98 as well as broader issues. The ShermanAnti-trust Act was passed in 1890. Then in 1914 the Clayton Act was passed tohelp with Anti-trust Cases. Anti-trust Lawsuits are few and far between, butrecently cases against Microsoft are stacking up all around the world.

In 1890the Sherman Anti-trust Act was passed, but it was not until much later that itwas enforced. The Act stated “every contract, combination in the form oftrust or otherwise, or conspiracy, in restraint of trade or commerce among theseveral States, or with foreign nations.” The Sherman Anti-trust act wastoo vague and too difficult to enforce. The Clayton Act of 1914 helped thisproblem by making a more specific attack on monopolies.

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Things like predatoryprice-cutting, price discrimination, and acquisition of stock in a competingcompany with intent to destroy competition all became illegal. John D.

Rockefeller is a prime example of monopolies in US History. By buying outcompetitors, or driving them out of business he obtained nearly 100 percent ofthe market in oil refining. The Standard Oil Company was eventually forced todissolve into smaller companies after the case Standard Oil Company vs. UnitedStates, 221 U.S. 1 (1911). Before this case the Anti-trust Laws had not been putto much use, which was not to the benefit of consumers. Now the spotlight is onMicrosoft Corporation, and their apparent attempt to take over the Internetbrowser market. Concerns aroused recently because of the expected release ofWindows 98, which uses Microsoft Internet Explorer in almost every applicationit runs. The US government has seemingly acknowledged Microsoft’s monopoly ofoperating systems and let it go by because of lack of competition in the market.

But now new issues are at stake, should Microsoft be allowed to expand itsalready almost monopoly into yet another field in the computer industry? Withthe incorporation of Microsoft Internet Explorer into the Microsoft operatingsystem Windows 98, Netscape Communications Corporation felt vulnerable, andfiled complaints with the Justice Department. Once the investigations wereinitiated, it seemed flocks of people jumped the bandwagon to attack the allegedMicrosoft Corporation Monopoly. 20 State Attorney Generals and the District ofColumbia, along with the Justice Department have filed against MicrosoftCorporation. Japan has also filed an Antitrust Lawsuit against Microsoft. Itseems that everywhere Microsoft is, there looms a bit of concern for theconsumers and their futures. Currently 90 percent of the world’s personalcomputers run on Microsoft operating systems. The remaining ten percent of theindustry is divided between Apple’s Macintosh, IBM’s OS/2, and Unix. The federaland state antitrust regulators are arguing that Microsoft has illegally used thepopularity of its operating systems to eliminate its competition in the softwareindustry. Many economists feel that these lawsuits against Microsoft Corporationcould be as revolutionary as those against Bell Telephone in 1984 and John D.

Rockefeller’s Standard Oil Company in 1911. Microsoft Corporation however,disagrees, arguing that the changes being demanded by federal and stategovernment will take months to perform and would cause the software to beuseless. Microsoft clings strongly to their beliefs that Windows 98 cannotsucceed without Internet Explorer. “Such an operating system – which wouldtake many months (if not years) to develop and test – would bear little, if any,resemblance to Windows 98 because Internet Explorer technologies are such acritical element of that product,” Microsoft wrote. Although it may be truethat Windows 98 is based around Internet Explorer, should the government allowMicrosoft to sell its product and gain more market share? One option thatfederal and state governments gave Microsoft was to have the Windows 98 packagebe sold with the Netscape Navigator Browser, Microsoft’s main competitor. Thisrequest was seen as ridiculous by Mark Murray, a spokesman at Microsoftheadquarters, who has been quoted as saying, “that’s like the governmentforcing Coke to put two cans of Pepsi in every six-pack.” The only choicesbeing offered to Microsoft at this point are to “unbundle” Windows 98and Internet Explorer, or to add in the Netscape Navigator Browser. Theunbundling process is what Microsoft Corporation says will take seven months tohandle, and therefore had asked for a delay for the court dates. The federal andstate governments were demanding immediate court dates to assure that Microsoftwould not be able to market Windows 98 as it is now. A compromise was madebetween the two differing requests, and the court date was set for September 8,1998. Some foresee this as an advantage for Microsoft who will be able to selltheir products through September. But the federal and state governments arehappy that the court is not allowing them to go through the immense Christmasbuying frenzy as well. It is most likely to the advantage of Microsoft more sothan the government that the date was set for September, but only time will showwhat happens. These lawsuits allege that Microsoft Corporation is using itspower with Windows 98 to stomp out any competition to the Microsoft InternetExplorer web browser, especially that of the Netscape Navigator Browser.

Microsoft undoubtedly feels that they are only supplying consumers with thehighest quality product for its value. When you consider that the InternetExplorer will be free compared to the Netscape Navigator Browser which must bepurchased, it seems obvious whom the consumers will favor. Although the Internetbrowsers are the main focus of the Antitrust suit right now, there are othersmall details that have been somewhat overlooked. For instance, the governmentalleges that Microsoft forced computer makers to set up computers so that userssaw the Windows logo whenever they turned on their machine. There is alsoevidence hinting that Microsoft tried to get Netscape to collaborate in order toavoid competition in the browser market. Netscape however, turned down the offerto join in an illegal conspiracy. Microsoft has been put under a brightspotlight where consumers are beginning to question the corporation’s intent. Itonly seems natural that Microsoft would defend themselves with a large publicrelations campaign. For a company such as Microsoft, where the company name isalso the brand name, it is extremely important that the public views them ingoodwill. The new series of television commercials that Microsoft Corporation isbroadcasting are designed to illustrate how Microsoft is helping the public.

This type of campaigning is known as image advertising, it is designed toencourage goodwill toward the company, rather than sales of their products. Sofar there is little evidence to indicate that Microsoft has lost any supportfrom the public due to the antitrust lawsuits. At best it seems that theMicrosoft Corporation antitrust lawsuits are at a standstill until September 8,1998. For the consumers’ benefit, we can only hope that the US Supreme Courtwill rule in favor of the federal and state governments. If Windows 98 isreleased without being “unbundled” then the future of the informationage, and all Internet related technologies will be forever changed. When thereis no longer competition with Microsoft in any fields in the computer industry,then the consumers will be left with no choice but to support Microsoft nomatter what happens. Prices could sky rocket, quality could plummet, and allbecause the monopoly could not be stopped until it was too late. AlthoughMicrosoft products might be better, especially when using them intertwined withone another, the elimination of competition – intended or not – is never to thebenefit of the consumers.

Bibliography1. Goodin, Dan; “Microsoft Trial Date: Sept. 8;” CNET NEWS.COM; May22, 1998. 2. http://www.us-history.com/chpt_4.html 3. Paulson, Michael;”Microsoft Takes Fight to Court of Public Opinion;” SeattlePost-Intelligencer, May 20, 1998. 4. Paulson, Michael; “Microsoft SaysChanges Sought Would Render Windows 98 Worthless;” SeattlePost-Intelligencer; May 22, 1998. 5. Rowley, James; “Microsoft Suits AreFiled;” Bloomberg News; May 18, 1998. 6. Rowley, James, and Squeo, AnneMarie; “Microsoft Loses Bid to Delay Trial of Antitrust Suit;”Bloomberg News; May 1998. 7. Squeo, Anne Marie, “Microsoft Seeks 7-MonthDelay to Respond to Antitrust Suit;” Bloomberg News; May 21, 1998. 8.

Zitner, Aaron; “Antitrust Suits Expected as Microsoft Talks BreakDown;” The Boston Globe; May 17, 1998.

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