Us antitrust policy


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Microsoft US Antitrust Policy

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Us antitrust policy

  2. 2. US Antitrust Policy
  3. 3. SHERMAN ACT  Every contract, combination in the form of trust or otherwise, or conspiracy, unrestrained trade or commerce among the several states, or with foreign nations, is declared to be illegal.  Every person who shall monopolize or attempt to monopolize or combine or conspire with any other person or persons, to monopolize any part of trade or commerce among the several states or with foreign nations shall be deemed guilty of a felony. CLAYTON ANTITRUST ACT  It shall be unlawful to discriminate in price between different purchasers of commodities.  It shall be unlawful for any person to lease or make a sale or contract on the condition, agreement, or understanding.  No Corporation shall acquire the whole or any part of other corporation. FEDERAL TRADE COMMISSION ACT  Unfair methods of competition and unfair or deceptive acts or practices are declared unlawful.
  4. 4. Microsoft a monopoly?  In late 1990, Microsoft’s MS Office applications had 90% of market share  Market share in Internet browser market of 44%, server operating system 36%  Microsoft adopted pricing policy that prevents entry of new players and bundle policy  Distributing Internet browser software, IE, free of cost along with its windows operating system “The government viewed microsoft as a paranoid monopolist,someone who gets up in middle of the night and shoots at amy moment. ”-chief judge,US District Court.
  5. 5. During 1991-1994 investigations by the Federal Trade Commission (“FTC”) ended with no lawsuits. In 1994, Microsoft had signed a decree not to bundle its software with its OS unless it was integrated. In 1997, it was compelling the PC makers to ship its internet browser free with windows 95. Sun Microsystems, Oracle, IBM, Netscape, and Novell formed a loose coalition lobbying intensely for antitrust action against Microsoft. On October 20, 1997, DOJ alleged that Microsoft violated the 1995 consent decree. On December 11, 1997, Judge Thomas Penfield Jackson issued a preliminary injunction barring the bundling of IE with On May 12, 1998, the Court of Appeals (DC Circuit) ruled that the 1995 consent decree did not apply to Windows 98. On June 23, 1998, the Court of Appeals voided the 1997 preliminary injunction, arguing that “courts are ill equipped to evaluate the benefits of high-tech product design.” DOJ filed a major antitrust suit against Microsoft. In this action (DOJ Complaint 98-12320), filed on May 18, 1998, DOJ was joined by the Attorneys General of 20 States and the District of Columbia. 24 witnesses testified over a period of 62 days. TRIAL
  6. 6. 1999, Judge Jackson finds that Microsoft holds monopoly power with its Windows Operating System and issues his final ruling ordering that Microsoft be split into two companies, one for the operating system and one for applications. In 2000, June 28 – Court of Appeals issues its ruling reversing Judge Jackson’s order to break up Microsoft, but finding merit in allegations that Microsoft violated Sec. 2 of the Sherman Act. Court remanded the case back to a different district court judge for further findings. November 2 – Microsoft and U.S. Justice Department announce they have arrived at a settlement agreement requiring Microsoft to make portions of Windows software code available to competitors so they can ensure that their products work with the operating system, and allowing computer manufacturers to pick and choose which of its products to load onto their machines without fear of retribution from Microsoft.
  7. 7. The verdict In June 2008, the US District court gave its ruling that Microsoft has violated the antitrust laws by abusing its power in operating system. Jackson ruled that Microsoft was a monopoly; basing on 3 factors Microsoft’s share of the market for operating system was extremely large & stable A high entry barrier protected Microsoft’s dominant market share High entry barrier Verdict Company should split into 2 smaller companies Windows operating system Internet & other Business
  8. 8. Options Before DOJ DOJ stated that it would ask for restrictions on Microsoft's business tactics. The DOJ had two options:- Force Microsoft to open its source code for the windows operating system – to competitors Allow PC original equipment manufacturers (OEMs) to configure Windows any way they liked, removing Microsoft programs, adding rival programs, and even changing the entire appearance of Windows.
  9. 9. Microsoft: Appeal  September 2000, Supreme court declined government’s bid  Break up Microsoft not remedy: Supreme court  Court upheld conclusion of Microsoft having monopoly & violated US antitrust laws  In 2001, court ordered Microsoft and US government resolve remaining issues,after the court reversed the appeal.
  10. 10. • In 2001, Microsoft appealed to the supreme court to overcome the the case the it had illegal monopoly, hared customers and stifled competition. • In 2001, judge said to Microsoft and the US Government to resolve the case with additional evidence to be presented. • DOJ urged the supreme court to reject Microsoft plea as the company had violated antirust laws.
  11. 11. SWOT Analysis OPPOTUNITIES Have potential to attract more customers Should establish a clean image THREAT Threat from competitors companies like from Linux and Apple May face strong illegal obligation STRENGTH Huge Brand name and reputation in the market Have a monopoly in the market WEAKNESS Customers lacked a commercially viable alternative to windows Contradiction among own products
  12. 12. Conclusion  Microsoft dominance because of Antitrust case, affected only for short run  Microsoft’s OS monopoly continues today  Microsoft has so many actions against it, can only cover the most important  Law should not eradicate competition rather it should ensure proper competition