Essay, Research Paper: Microsoft Anti Trust Case

Microsoft Anti-Trust Case
In 1890, Congress passed the Sherman Anti-Trust Act. Since then there has been
very few companies that have violated this act. In 1911 it was used it to break J.D.
Rockefeller’s Standard Oil trust in to 30 different competing companies. Then in 1982
AT&T’s monopoly was broken up in what has been called the biggest anti-trust case to
date. Now Microsoft has been charged and found guilty. ( “America's History Of
Monopoly-Busting” )
Lack of trust in Microsoft started in 1991 when the Federal Trade Commission
(FTC) began its investigations that Microsoft had monopolized the market on PC
operating systems. Their investigation continued until 1993 when the FTC came just two
votes short of filing a formal complaint against Microsoft for antitrust violations. At this
time the FTC closed its investigations but the Justice Department and European
Commission began independent searches. ( “Microsoft, DOJ timeline” 1999)
In 1994 Microsoft agreed to change their contracts with PC makers and got rid of
some restrictions on other software makers thus settling both the Justice Department and
European Commissions antitrust investigations. Then in January of 1995, Stanley Sporkin,
a U.S. district judge, rejects the settlement but in the June the U.S. Court of Appeals
reinstates the settlement. In April of the same year Microsoft was prohibited from buying
Intuit because it could drive up software prices and diminish innovation. ( “Microsoft,
DOJ timeline” 1999)
In October of 1995 the Justice Department sues Microsoft for supposedly violating
the 1994 agreement by requiring Internet Explorer to be installed on all PC’s loaded with
Windows 95. The European Commission also begins looking into Microsoft’s practices.
In the same month, Compaq Computer Corp., the worlds largest personal PC maker,
claimed that Microsoft threatened to terminate Compaq’s Windows 95 license if they
didn’t put Internet Explorer on any computers that they put Windows 95 on. The next
month The Justice department charges Microsoft with knowingly integrating their web
browser into Windows 95 in a desperate attempt to steal the market from Netscape
Communications Corp. ( “Microsoft, DOJ timeline” 2000)
On December 11th 1997, Thomas Penfield Jackson, a U.S. District Judge, issues a
preliminary injunction forcing Microsoft to stop requiring PC makers to install Internet
Explorer on computers. A month later, Microsoft comes to a partial settlement with the
Justice Department. It allowed PC makers to remove or hide its Internet software on new
versions of Windows 95. About the same time Netscape announces that they are going to
be making their web browser for free. ( “Microsoft, DOJ timeline” 2000)
Microsoft openly breached the injunction with the release of Window 98 in April
of 1998. They integrated their web browser and made a browser icon visible on the
desktop. Microsoft also stated that they had no plans to let computer makers hide the
browser icon, since that agreement only applied to Windows 95. ( “Microsoft, DOJ
timeline” 2000)
In October of 1998 the government opens their antitrust suit against Microsoft. In
the case the government used internal company documents to disprove Bill Gates’
deposition about him not aware of a controversial meeting with Netscape executives in
1995. Netscape Chief Executive, James Barksdale testified that Microsoft has threatened
to “destroy Netscape’s business” unless they let Microsoft dominate the browser market.
IBM executive Gary Norris testified that Microsoft threatened to withhold the computer
maker’s Windows license because IBM was going to include some rival software in its
PCs. On November 5th, 1999, the judge ruled that Microsoft was holding a monopoly
over the PC operating systems market and that the companies actions were harmful to
consumers. ( “Microsoft, DOJ timeline” 2000)
After the ruling the Government and Microsoft began negotiations. The
negotiations continued for four months. When Judge Jackson was about to release his final
decision Microsoft made an offer to settle the case with the Government. The Government
was unimpressed with Microsoft’s offer and rejected it. ( “Microsoft, DOJ timeline” 2000)
On April 3rd, 2000, Judge Jackson Made his final decision. He ruled Microsoft
Corp. violated the nation’s antitrust laws by using its monopoly power in PC operating
systems to shutout all other competition. As a result of the decision Microsoft stock
plummeted 14.5% on the day of the ruling and contained to drop for days after it.
( “Microsoft, DOJ timeline” 2000)
Judge Jackson has yet to make a decision as to how Microsoft’s monopoly is
going to be remedied. So far there are 20 different ways it could go. It could be as small as
imposing large fines on Microsoft and restricting their conduct in the market place or, in
the most extreme case, they would break up Microsoft. ( “Verdict stings Microsoft" )



Bibliography


Works Cited
CNNfn. “Microsoft, DOJ timeline”.
http://cnnfn.com/2000/04/03/technology/microsoft_chronology/ (3 Apr. 2000)
http://cnnfn.com/1999/11/05/technology/microsoft_chronology/ (5 Nov. 1999)
CNNfn. “Verdict stings Microsoft”.
http://cnnfn.com/2000/04/03/technology/microsoft/ (3 Apr. 2000)
Jackson, Brooks/CNN. “America's History Of Monopoly-Busting”.
http://cnn.com/ALLPOLITICS/1998/05/15/antitrust.jackson/ (15 May 1998)


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