The Anti-Trust Case Against Microsoft


Since 1990, a battle has raged in United States courts between the
United States government and the Microsoft Corporation out of Redmond,
Washington, headed by Bill Gates. What is at stake is money. The federal
government maintains that Microsoft\'s monopolistic practices are harmful to
United States citizens, creating higher prices and potentially downgrading
software quality, and should therefore be stopped, while Microsoft and its
supporters claim that they are not breaking any laws, and are just doing good
business.
Microsoft\'s antitrust problems began for them in the early months of
1990(Check 1), when the Federal Trade Commission began investigating them for
possible violations of the Sherman and Clayton Antitrust Acts,(Maldoom 1) which
are designed to stop the formation of monopolies. The investigation continued on
for the next three years without resolve, until Novell, maker of DR-DOS, a
competitor of Microsoft\'s MS-DOS, filed a complaint with the Competition
Directorate of the European Commission in June of 1993. (Maldoom 1) Doing this
stalled the investigations even more, until finally in August of 1993, (Check
1)the Federal Trade Commission decided to hand the case over to the Department
of Justice. The Department of Justice moved quickly, with Anne K. Bingaman, head
of the Antitrust Division of the DOJ, leading the way.(Check 1) The case was
finally ended on July 15, 1994, with Microsoft signing a consent
settlement.(Check 1)
The settlement focused on Microsoft\'s selling practices with computer
manufacturers. Up until now, Microsoft would sell MS-DOS and Microsoft\'s other
operating systems to original equipment manufacturers (OEM\'s) at a 60% discount
if that OEM agreed to pay a royalty to Microsoft for every single computer that
they sold (Check 2) regardless if it had a Microsoft operating system installed
on it or not. After the settlement, Microsoft would be forced to sell their
operating systems according to the number of computers shipped with a Microsoft
operating system installed, and not for computers that ran other operating
systems. (Check 2)
Another practice that the Justice Department accused Microsoft of was
that Microsoft would specify a minimum number of minimum number of operating
systems that the retailer had to buy, thus eliminating any chance for another
operating system vendor to get their system installed until the retailer had
installed all of the Microsoft operating systems that it had installed.(Maldoom
2)
In addition to specifying a minimum number of operating systems that a
vendor had to buy, Microsoft also would sign contracts with the vendors for long
periods of time such as two or three years. In order for a new operating system
to gain popularity, it would have to do so quickly, in order to show potential
buyers that it was worth something. With Microsoft signing long term contracts,
they eliminated the chance for a new operating system to gain the popularity
needed, quickly.(Maldoom 2)
Probably the second most controversial issue, besides the per processor
agreement, was Microsoft\'s practice of tying. Tying was a practice in which
Microsoft would use their leverage in one market area, such as graphical user
interfaces, to gain leverage in another market, such as operating systems, where
they may have competition.(Maldoom 2) In the preceding example, Microsoft would
use their graphical user interface, Windows, to sell their operating system, DOS,
by offering discounts to manufacturers that purchased both MS-DOS and Windows,
and threatening to not sell Windows to companies who did not also purchase DOS.
In the end, Microsoft decided to suck it up and sign the settlement
agreement. In signing the agreement, Microsoft did not actually have to admit to
any of the alleged charges, but were able to escape any type of formal
punishment such as fines and the like. The settlement that Microsoft agreed to
prohibits it, for the next six and a half years from:
-Charging for its operating system on the basis of computer shipped
rather than on
copies of MS-DOS shipped;
-Imposing minimum quantity commitments on manufacturers;
-Signing contracts for greater than one year;
-Tying the sale of MS_DOS to the sale of other Microsoft
products;(Maldoom 1) Although these penalties look to put an end to all of
Microsoft\'s evil practices, some people think that they are not harsh enough and
that Microsoft should have been split up to put a stop to any chance of them
forming a true monopoly of the operating system market and of the entire
software market.
On one side of the issue, there are the people who feel that Microsoft
should be left alone, at least for the time being. I am one of these people,
feeling that Microsoft does more good than bad, thus not necessitating their
breakup. I feel this way for many reasons, and until