Case Study - Playing Monopoly Microsoft

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Microsoft’s journey towards Monopoly

Summary

The case evolves around the unethical monopolistic actions taken by Microsoft to achieve monopoly. Some major facts in the case are given below – • In 1980 IBM representative met bill gates for Operating System • Bill Gates bought Operating System from a friend in $60,000 Microsoft licensed MS-DOS to IBM with condition that it could license it to others too •1981 IBM started mass production of and MS-DOS became standard Operating System for Personal Computer •More programmers willing to write programs for MS-DOS

•Network effect of MS-DOS
•MS-DOS increase caused decrease in market share of other
•1984 Apple developed Graphical user interfaces which became very popular •1987 Microsoft launched Windows for IBM Personal Computer’s that copied Apples GUI features •Apple sued Microsoft for copying look& feel and lost

•1995 Windows 95, 1998 Windows 98, 2000 Windows Millennium 2002 Windows XP •2000 Microsoft controlled 90% of Personal Computer Operating System market •1990’s two threats to Microsoft’s Monopoly: Netscape Navigator, Java •15 December 1994, Netscape Navigator captured 70% browser market •May 1995 Sun Microsystems developed java, a platform independent language •September 1996 Bill gates Asked manager to neutralize java •Java Netscape Joined forces

•June 1995 Microsoft team met Netscape executives, proposed Browser market division •MS refused to share code of window 95, Netscape had to wait till it launched to develop its browser for Win 95 •Microsoft developed its own browser Internet Explorer

•Internet Explorer copied Netscape’s many features but failed to capture browser market •Microsoft required companies using Windows not to remove IE, not to promote Netscape •Microsoft obtained license to distribute Java with Windows from Sun.Microsoft changed java so regular java programs could run on windows java version. Programmer had to use windows java version. Microsoft encouraged programmers to use its java version by special technical support •18 May 1998 DOJ headed by Janet Reno filed antitrust suit against Microsoft claiming violation of Sherman Antitrust Act. Judge Jackson ordered company to b broken up into two companies that were not allowed to share technical information and let computer manufactures remove Internet Explorer. •Microsoft claimed it was responsible for innovation in computer industry. Microsoft appealed the verdict and 28 June 2001 federal court reversed the penalty •George W Bush administration signed John Ashcroft as new attorney general •Microsoft contributed heavily for 5 years in republican parties election campaign,(75% of its budget) •2 November 2001 DOJ announced a settlement with Microsoft •Microsoft would share its application programming interface with other companies •April 2004 the European Commission issued final ruling Microsoft had broken competition law, fining Microsoft 497 million Euros and ordered to disclose its interface to competitors and offer windows without Microsoft’s digital media player •Microsoft appealed this ruling to the European Court

•In June 2004 European commission agreed that Microsoft did not have to obey this order until courts rule on appeal •Some government and major companies shifted to and are shifting to Linux

Answer to the Questions

Question 1: Identify the behaviors that you think are questionable in the history of Microsoft. Evaluate the ethics of these behaviors?

Answer: Some of the questionable behaviors in the history of Microsoft are:  In the year 1981, Bill Gates purchased an operating system written by his friend for $60,000. But he sold it to IBM without informing his friend. It was legal for Bill Gates to sell the operating system to IBM, since he had bought it and it became his property. However, Bill Gates was considered unethical since he bought the software for $ 60,000 and sold it for far higher prices and obtained royalty as IBM PC market share increased. Before Bill...
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