Term Papers on The Anti-Trust Case Against Microsoft

Term Paper Title	The Anti-Trust Case Against Microsoft
# of Words	2325
# of Pages (250 words per page double spaced)	9.3

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 year...

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