Econ312 Week 3 Assignment - the Microsoft Case

Topics: Monopoly, Competition, Microsoft Pages: 3 (918 words) Published: September 9, 2012
The Microsoft Case
It is well known that the Microsoft Corporation is the largest computer operating system manufacturer in the United States. The in late 1990’s, more than ninety percent of all personal computers that were sold were equipped with Microsoft [ (Wright, 1998) ]. Software companies felt secure in writing their programs in the Windows platform, knowing that their software would be compatible for most people’s PCs. With most software now being written for Windows, computer manufacturers would then install Windows in their products, confident that consumers would buy it. This is how the Windows monopoly was created.

Bill Gates built his company through aggression and determination, often buying up small companies whose ideas he liked. For those companies who he could not buy, he would create similar products to theirs, selling them for less and marketing them strategically. The tactics he used to create his Microsoft Empire were all legal, yet in 1998 Microsoft found themselves facing a lawsuit against the U.S. Justice Department in violation of the Antitrust Laws [ (Wright, 1998) ]. Antitrust Laws were created in the late 1800’s, early 1900’s as legislation to prevent unlawful monopolies, to promote competition, and to encourage the production of quality goods at reasonable prices, protecting the public from monopolized markets that take advantage of their consumers [ (Hartman, 1997) ].

The U.S Justice Department declared that Microsoft was in fact a monopoly, although Bill Gates always denied these allegations. Under Antitrust Laws, firms considered to be monopolies are held to a higher standard and often have stricter policies and laws that other corporations do not have to abide by. The characteristics of a monopoly are simple: a firm that is the sole producer of a product with no close substitutions. In this case, Microsoft held over 90% of the market share with their operating system and browser, with no competitors able to get their...
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