Anti-trust Acts in the Information Age
As many people have noticed, recently there has been a huge focus in the media on 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 September 8, 1998. This trial date will address a government request for a preliminary injunction concerning Windows 98 as well as broader issues. The Sherman Anti-trust Act was passed in 1890. Then in 1914 the Clayton Act was passed to help with Anti-trust Cases. Anti-trust Lawsuits are few and far between, but recently cases against Microsoft are stacking up all around the world.
In 1890 the Sherman Anti-trust Act was passed, but it was not until much later that it was enforced. The Act stated "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations." The Sherman Anti-trust act was too vague and too difficult to enforce. The Clayton Act of 1914 helped this problem by making a more specific attack on monopolies. Things like predatory price-cutting, price discrimination, and acquisition of stock in a competing company with intent to destroy competition all became illegal.
John D. Rockefeller is a prime example of monopolies in US History. By buying out competitors, or driving them out of business he obtained nearly 100 percent of the market in oil refining. The Standard Oil Company was eventually forced to dissolve into smaller companies after the case Standard Oil Company vs. United States, 221 U.S. 1 (1911). Before this case the Anti-trust Laws had not been put to much use, which was not to the benefit of consumers.
Now the spotlight is on Microsoft Corporation, and their apparent attempt to take over the Internet browser market. Concerns aroused recently because of the expected release of Windows 98, which uses Microsoft Internet Explorer in almost every application it runs. The US government has seemingly acknowledged Microsoft's monopoly of operating 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 its already almost monopoly into yet another field in the computer industry?
With the incorporation of Microsoft Internet Explorer into the Microsoft operating system Windows 98, Netscape Communications Corporation felt vulnerable, and filed complaints with the Justice Department. Once the investigations were initiated, it seemed flocks of people jumped the bandwagon to attack the alleged Microsoft Corporation Monopoly. 20 State Attorney Generals and the District of Columbia, along with the Justice Department have filed against Microsoft Corporation. Japan has also filed an Antitrust Lawsuit against Microsoft. It seems that everywhere Microsoft is, there looms a bit of concern for the consumers and their futures.
Currently 90 percent of the world's personal computers run on Microsoft operating systems. The remaining ten percent of the industry is divided between Apple's Macintosh, IBM's OS/2, and Unix. The federal and state antitrust regulators are arguing that Microsoft has illegally used the popularity of its operating systems to eliminate its competition in the software industry. Many economists feel that these lawsuits against Microsoft Corporation could 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 state government will take months to perform and would cause the software to be useless.
Microsoft clings strongly to their beliefs that Windows 98 cannot succeed without Internet Explorer. "Such an operating system - which would take many months (if not years) to develop and test - would bear little, if any, resemblance to Windows 98 because Internet Explorer technologies are such a critical element of that product," Microsoft wrote. Although it may be true that Windows 98 is based around Internet Explorer, should the government allow Microsoft to sell its product and gain more market share?
One option that federal and state governments gave Microsoft was to have the Windows 98 package be sold with the Netscape Navigator Browser, Microsoft's main competitor. This request was seen as ridiculous by Mark Murray, a spokesman at Microsoft headquarters, who has been quoted as saying, "that's like the government forcing Coke to put two cans of Pepsi in every six-pack." The only choices being offered to Microsoft at this point are to "unbundle" Windows 98 and Internet Explorer, or to add in the Netscape Navigator Browser.
The unbundling process is what Microsoft Corporation says will take seven months to handle, and therefore had asked for a delay for the court dates. The federal and state governments were demanding immediate court dates to assure that Microsoft would not be able to market Windows 98 as it is now. A compromise was made between 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 sell their products through September. But the federal and state governments are happy that the court is not allowing them to go through the immense Christmas buying frenzy as well. It is most likely to the advantage of Microsoft more so than the government that the date was set for September, but only time will show what happens.
These lawsuits allege that Microsoft Corporation is using its power with Windows 98 to stomp out any competition to the Microsoft Internet Explorer web browser, especially that of the Netscape Navigator Browser. Microsoft undoubtedly feels that they are only supplying consumers with the highest quality product for its value. When you consider that the Internet Explorer will be free compared to the Netscape Navigator Browser which must be purchased, it seems obvious whom the consumers will favor.
Although the Internet browsers are the main focus of the Antitrust suit right now, there are other small details that have been somewhat overlooked. For instance, the government alleges that Microsoft forced computer makers to set up computers so that users saw the Windows logo whenever they turned on their machine. There is also evidence hinting that Microsoft tried to get Netscape to collaborate in order to avoid competition in the browser market. Netscape however, turned down the offer to join in an illegal conspiracy. Microsoft has been put under a bright spotlight where consumers are beginning to question the corporation's intent. It only seems natural that Microsoft would defend themselves with a large public relations campaign.
For a company such as Microsoft, where the company name is also the brand name, it is extremely important that the public views them in goodwill. The new series of television commercials that Microsoft Corporation is broadcasting are designed to illustrate how Microsoft is helping the public. This type of campaigning is known as image advertising, it is designed to encourage goodwill toward the company, rather than sales of their products. So far there is little evidence to indicate that Microsoft has lost any support from the public due to the antitrust lawsuits.
At best it seems that the Microsoft Corporation antitrust lawsuits are at a standstill until September 8, 1998. For the consumers' benefit, we can only hope that the US Supreme Court will rule in favor of the federal and state governments. If Windows 98 is released without being "unbundled" then the future of the information age, and all Internet related technologies will be forever changed. When there is 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 no matter what happens. Prices could sky rocket, quality could plummet, and all because the monopoly could not be stopped until it was too late. Although Microsoft products might be better, especially when using them intertwined with one another, the elimination of competition - intended or not - is never to the benefit of the consumers.
1. Goodin, Dan; "Microsoft Trial Date: Sept. 8;" CNET NEWS.COM; May 22, 1998.
3. Paulson, Michael; "Microsoft Takes Fight to Court of Public Opinion;" Seattle Post-Intelligencer, May 20, 1998.
4. Paulson, Michael; "Microsoft Says Changes Sought Would Render Windows 98 Worthless;" Seattle Post-Intelligencer; May 22, 1998.
5. Rowley, James; "Microsoft Suits Are Filed;" Bloomberg News; May 18, 1998.
6. Rowley, James, and Squeo, Anne Marie; "Microsoft Loses Bid to Delay Trial of Antitrust Suit;" Bloomberg News; May 1998.
7. Squeo, Anne Marie, "Microsoft Seeks 7-Month Delay to Respond to Antitrust Suit;" Bloomberg News; May 21, 1998.
8. Zitner, Aaron; "Antitrust Suits Expected as Microsoft Talks Break Down;" The Boston Globe; May 17, 1998.