The Famous Microsoft Monopoly Case

by Commercial Blawg on March 15, 2013

  • SumoMe

Guest post regarding the famous Microsoft monopoly case

Microsoft Corporation dominated the Web browser market when it packaged its proprietary Internet Explorer browser with its own operating system, Windows. When customers bought Windows, they no longer had to download or buy other browsers, and competing brands lost market share.

In 1998, the United States Supreme Court, in the case United States v. Microsoft, charged Microsoft with violating the Sherman Antitrust Act of 1890, which was implemented to prevent monopolies from stifling competition.

Antitrust Violations

Microsoft was accused of buying shares in Apple, their main competitor, and requiring computer manufacturers, like Dell and Compaq, to ship their PCs with the whole bundle. The court said that Microsoft could not make these demands, and a move to buy out Apple was illegal.

The competing web browsers, Netscape and Opera, did not have operating systems of their own and could not offer a similar deal. Microsoft was providing its browser for free with the operating system, which was good for customers and an advancement in technology. Microsoft argued that it was providing good value, through innovation, to its customers.

The Department of Justice determined that Microsoft’s actions were illegal. By the ’90s, most people owned PCs running Windows, and had little choice but to accept Internet Explorer, which came installed on all Windows PCs. The court wanted Microsoft and Internet Explorer to be physically separate, so consumers would have a broader choice of browsers when buying computers. This is better for the quality of all market products when some competition exists.

Court Rulings

At the time, the Internet was slow, and downloading Netscape or Opera was time consuming and impractical. Today, networks are much faster and Internet users have more freedom to access different browsers, so that problem no longer exists.

Microsoft appealed to the court to reverse the claims. The appeal was successful, and it was determined that the company had done nothing illegal. The combining of Windows with Internet Explorer was a legitimate business move. A ruling was passed to allow other software to exist on Windows, which allowed for some competition.

The court ruled that Microsoft could not stop competing software from being installed on Windows. Users could install any browser. This left the option open for competitors to build a better browser as a means of being competitive.

New Competition for Microsoft

New web browsers, such as Firefox and Google Chrome, were developed. Some browsers like Netscape disappeared, yet others like Opera remained.

Other forms of competition evolved regardless of the law’s impact. Mac OS had its own browser, Safari, and Linux users downloaded a variety of custom browsers.

From 2001 to the present, network speed increased as DSL and fiber optic connections were installed. Popular browsers like Firefox thrived, because it was easy for users to install them. Unlike the ’90s, it was no longer inconvenient to download software.

The New Web Market

In 2011, the antitrust laws expired. Microsoft bought Skype, a leading communications brand, to build a new bundle of web software to be installed on Windows 7 and Windows 8. Since there are many products for consumers to choose, the threat of Microsoft monopolizing the Web market no longer exists.

The laws were helpful early on, but they are not necessary in the present. Microsoft will need its new software bundles to remain competitive with modern brands like Apple, Amazon, and Google. These companies have their own operating systems and computers to compete with Microsoft. Products like the Kindle and the Samsung Chromebook have high sales.

About the author

Byron Greenwall covers a plentiful array of legal issues and topics, including Personal Injury, Family Law, Banking, Insurance Fraud, White Collar Crime and other areas.

Commercial Blawg

Commercial Blawg

Business law blogger at CommercialBlawg
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