Microsoft Corp.’s Pricing Policies Essay

Executive SummaryThis circumstance story focused on the Microsoft Corporation and charges do by their ch whollyengers, the federal official Trade Commission, and the surgical incision of unspoiltness of just usurpations and a monopoly of the nurture processing system operating systems and applications softw atomic number 18, software growing tools (e.g., com regulateer programing language software), and hardware peripherals (e.g., Microsoft Mouse) that Microsoft specializes in. It focused on numerous issues that would lead star to conceptualize that Microsoft was in detail monopolizing the holy application they were in. .In order to adequately dissertate and analyze the issues of this subject region, I surr give the sacker humble this paper up into four reissue sections. slit 1 Key damage & Concepts Description of the key terms & concepts that de n iodine to this quality ingredient 2 The razet Against Microsoft break the facts and in unionizeation that s upport my fortune against MicrosoftSection 3 The Defense of Microsoft Identify reliable facts and information that support a defense of MicrosoftSection 4 discussion What I devour well-educated from the caseAfter reading this case find out, I went back to the email that I real from you and went over the questions that you suggested we con spotr. The first-year question was If you were the jurist how would you build a case against Microsoft or a dominant leader? I will attempt to do this in Section 2 The Case Against Microsoft. The indorsement question was If you were Microsoft how might you defend yourself against judge claims? I will cover this in Section 3 The Defense of Microsoft. I will attempt to show wherefore it was rightfully infallible for the DOJ to prevail on a case of monopoly and antitrust violations against Microsoft. In doing this, I will attempt to put myself into Microsofts shoes and defend their claims that they put one over non created a mon opoly.Section 11. Key Terms & ConceptsThe reason I decided to include these terms and concepts was to give way it easier for me to write this paper and use certain terms with start describing them each prison term I used them in my paper. discussion section of meetice, antimonopoly category The Assistant Attorney common for antitrust, a presidential appointee, ran the Antitrust Division of the DoJ. When the Division model the evidence was sufficiently persuasive, it brought criminal charges. The Division similarly entered into negotiations with crea sees to end litigation in exchange for combine decrees in civil cases, or nolo contendere (no contest) cheer in criminal casesDOJ Department of Justice The United States Department of Justice (DOJ) is a Cabinet department in the United States governing designed to put through the law and defend the interests of the United States check to the law and to en incontestable fair and simple administration of justice for all Amer icans (http//en.wikipedia. Org /wiki / United_States_Department_of_Justice) body politic Disc Operating SystemFTC Federal Trade Commission The FTC enforces federal antitrust and consumer protection laws by investigating complaints against idiosyncratic companies initiated by consumers, vexationes, congressional inquiries, or reports in the media(http//en.wikipedia.org/wiki/Federal_Trade_Commission)ISVs Independent Software VendorsMS-DOS Microsoft Operating SystemsNDAs Non-disclosure agreementsOEMs master copy Equipment ManufacturersOS Operating SystemsPC person-to-person ComputerSherman Anti-Trust incite it made punishable any form of contract or combination among entities in regards to handicraft and commerce that would fuck off the effect of restraining trade. And it besides put responsibility on government attorneys and district courts to pursue and investigate trusts http//en.wikipedia.org/ wiki/ Sherman _ Antitrust_ sham)The Clayton Act of 1914 The Clayton Act was de signed to prevent monopoly in the beginning rather than to remedy its effects. To put through this goal, Congress authorized antitrust prosecutions whenever business practices whitethornsubstantially lessen controversy or tend to create a monopoly in any line of commerce, in any section of the country.Section dickens of the act forbade sellers from discriminating in equipment casualty sell goods of like grade and select to disparate buyers at different prices when often(prenominal) differences were nevery cost justified nor necessary to meet ambition. Section Three check the use of tying and liquid ecstasy dealing contracts. Tying contracts required purchasers or leases to sire a second, separate intersection in order to obtain the desired out(p)put. unshared dealing contracts obliged a purchaser or lessee non to deal in cross ways of competitorsVaporware is software or hardware which is announce by a developer well in advance of release, barely which then fa ils to emerge, either with or without a protracted development cycle. The term implies deception, or at least a negligent degree of optimism that is, it implies that the announcer knows that harvest-home development is in too archean a stage to support liable statements about its completion date, feature set, or even feasibility (http//en.wikipedia.org/wiki/Vaporware)Section 22. The Case Against MicrosoftIn order to suck in my case against Microsoft and prove that they are well-nigh assuredly in violation of monopoly and anti-trust regulations, I will answer the avocation questions1. Is this a case of monopoly?2. Is this case a violation of the Sherman Anti-Trust Act?Is this a case of monopoly?When I began considering my approach to this paper, I first apprehension about situations where I was absolutely sure I had been the victim of a monopoly. In order to do this, I first had to gather sure that I to the lavish understood exactly what a monopoly was. The American Heritag e Dictionary defines a monopoly as Exclusive control by one group of the means of producing or selling a commodity or inspection and repair. In simpler terms, I take on everlastingly thought of a monopoly as a galactic corporation doing its best to screw-over the trivial guy (A.K.A the guest) by doing its best to make as much money as possible.The first situation that came to mind when I thought of a monopoly was how the Comcast business line participation had a virtual strangle-hold on the cable service in my homes area. Since they had exclusive control of the means of producing or selling a commodity or service, in this case they were the that cable provider in our area, you were labored to pacify for Comcasts service unless you had send television or you were willing to settle for the wonderfully fuzzy reception from the antiquate rabbit ear antennas of historic period past.As a result, we unfortunately had to deal with Comcasts horrible service and always insurre ction rates. Luckily for us, another competitor came in to the picture when WOW (Wide Open double-u net profit-Cable-Phone) set up service in our area. We replenishmented cable providers almost immediately and we couldnt rich person been happier. They pro yen provided excellent customer service and their rates are systematically disdainthan Comcasts. As a consumer, we in spades benefited from the change magnitude competition and eventual abolition of the cable confederation monopoly in our area.With that out of the way, I was forced to look at whether or not Microsoft had a monopoly in their particular industry. Based on the information in this case, I cannot say that Microsoft has a monopoly on any single entire industry. Do they dominate the majority of endeavors that they bring to participate in? Of course they do. Just look at some of these songAs you can see from card 1, Microsoft dominates the trade shares of suite software in the United States. The only problem with these rime is the fact that they are limited in their time range. In my experience, three years is a long enough time to make an approximate forecast for incoming happenings, from a financial standpoint. However, that is from a loony toons and supply-chain perspective where the main variable happens to be the customers shipping fluctuations. In a volatile and constantly evolving market such(prenominal) as software development, these numbers could sway tremendously with the introduction of a naked and sought after product or changes in consumer wants and desires.Table 2 shows the financial numbers of Microsoft and three of their competitorsThis also tells a lot about Microsofts market dominance, but this time from a financial standpoint. Two things that stand out to me in this table are the fact that Microsoft has almost twice as much net revenue than their nearest competitor (Microsoft has 4,649 and Novell has 1,998). The second thing that jumped out to me is the fact that all of the competitors show an increase in net revenue from 1984 to 1994. Based on the growth of Microsofts competitors (which there are more than one), I feel cocksure in saying that Microsoft does not train a monopoly in their industry. They do not meet the standard set away by the simple definition in the dictionary of Exclusive control by one group of the means of producing or selling a commodity or service. As you can distinctly see from the tables, Microsoftdoes not have exclusive control of the means of producing or selling a commodity or service.However, Microsoft does in fact hold a monopoly on many other counts, one of which is that Microsoft Windows, the Microsoft OS, is installed on most personal information processing systems that can be purchased from Dell, Hewlett Packard, Compaq, and the like. Because this OS comes pre-installed, we as the consumers do not have much of a pick and there is not much of an secondary for us to go with unless we want to switch to an Apple Macintosh OS. Although Microsoft isnt a natural monopoly in the classically delimitate or economic sense that Ive identified above, it is a natural monopoly in the land of cyberspace. Microsoft is the path of least opposite for government, consumers, and programmers alike. Microsoft may have many faults, but they make a lot of things easier too. roughly of us are willing to call for a monopoly such as Microsoft has for increased convenience and usability. Microsoft is a one-product company, no subject how it may sometimes appear. Their success is essentially due to the success of Windows. It rose to indicator with one product, and it resides there because of the success of that product. unfortunately for us, this is not only the best product on the market, it is the only true utility(a) for us to use. In my book, regardless of the schoolbook definition, this constitutes a monopoly by Microsoft.Is this a case a violation of the Sherman Anti-Trust Act?As I give tongu e to in Section 1, the Sherman Anti-Trust Act makes illegal any form of contract or combination between entities in regards to trade and commerce that would have the effect of restraining trade. Based on this case and the readings from week 7, there is deduction that Microsoft did die the Sherman Anti-Trust Act, particularly Sections 1 and 2 of the Act. Section One prohibited contracts, combinations and conspiracies in restraint of trade while Section Two outlawed monopolies and attempts to command.Microsoft mard the Sherman Anti-Trust Act by lawlessly apply its market power to restrain trade in the high tech industry.A file from the DOJ on celestial latitude 19, 1999 stated that Microsoft engaged in illegal apportion in five separate ways* by tying browser gross sales to sales of the operating system* by using its market power to illegally maintain a monopoly* by attempting to monopolize the browser market* by autocratic exclusive dealing arrangements between itself and lu cre service providers and/or developers and* by marvelous first boot-up and screen restrictions on computer makers.http//news.com.com/2100-1001-233992.htmlThe DOJ filing in December of 1999 shows exactly why Microsoft was in violation of the Sherman Anti-Trust Act. Some of the things that Microsoft has done that clearly violate the act include, but are for certain not limited toMicrosoft customers upgrading their copies of Microsoft Office at the Microsoft website, but using the competitions web browser, are greeted with a nub insisting on the use of MSIE for the full edition of the update.On November 18, 1998 the digital recognize card company Blue jackpot Arts discovered that beta adaptations of Microsofts Outlook Express (which comes free with Internet Explorer) were automatically filing Blue mountains electronic mail greeting card game into the junk folder rather than the inbox. short afterwards, Blue Mountain Arts discovered that Microsofts WebTV service was blocking their e-mail greeting cards as well.When the courts ordered Microsoft to ship Windows without an integrated Internet Explorer, the company complied by offering a non-functional version of the OS, claiming that the browser was now so entirelyintegrated into Windows to remove it was tantamount to recess the operating system.-All three of these examples were taken from the adjacent website http//www.vcnet. com /bms/departments/dirtytricks.shtmlTo summarize, Ive identified the following factsMicrosoft does have a monopoly in their industryMicrosoft did violate Acts 1 and 2 of the Sherman Anti-trust ActIt is cheery for Microsoft to say that their success is solely found on them being able to mature good products. Although they do devote erratic resources to improving their technologies, they also massage diligently to stifle growth and in-roads from their competition.Section 33. The Defense of Microsoft I am not going to spend a commodious deal of time attempting to defend Micro soft. They have spent millions and millions of dollars working tirelessly to do it themselves. Furthermore, I firmly believe that they have established a monopoly and that this monopoly serves to futher one parties interests Microsofts. However, I did some research online and came up with the following paragraph from an article titled The Microsoft Antitrust Suit written by shaft of light Tracey.In it, he wrote The persecution of Microsoft is an assault on the free market, and on the intelligence of the American raft. It is the result of long-held envy by Microsofts competitors, including Netscape and Oracle. It is in violation of the constitution, being two ex post facto and vague (Getman). The governments persecution of Microsoft should be stopped, moreover, the antitrust legislation that has exposed business to unfair and unreasonable practices should be repealed. (http//www.levelthreesolutions.com/ creature/msantitrust.html)In Microsofts opinion, the government should not ge t involved in find what means a company uses to name their products. They feel that they have been able to watch over through hard work, tenancity, and superior products. Although it may be unfortunate for their competitiors, Microsoft feels that if you cant stand the heat, stay out of the kitchen. In essence, Microsoft makes the most money doing what they do by taking solid ideas from other people, such as the Disc Operating System, and devising them better. Microsoft doesnt monopolize the industry. They simply work harder, take risks, and capitalize where other companies have floundered.Section 44. Discussion in the beginning I discuss this particular case study, I must tell you that I have always been a big fan of Microsoft and Bill Gates. I have enjoyed the relatively cheap cost of Microsofts software such as Microsoft outmatch and Word. I have also mat that with each successive upgrade of these products I have only been able to cleanse my performance both at work and sch ool. I also thought it was glorious that Bill Gates could take his ideas, thrust forward with his undefeatable will, and become one of the richest people in the entire world. However, this case study and the analysis that Ive done with it has authentically opened my eyes to the seamy side of Microsoft and Bill Gates.I was so travel by this case that I even went and downloaded one of Microsofts few meshwork browser competitors, Netscape, to compare its product with Internet Explorer. When my wife asked me what my paper was I about I told her it was about Microsoft and whether or not they were a monopoly in the industry. Her very quick and wry response state it so perfectly Duh, of course they are. level off I know that. I intend this says it all so succinctly. Do I think Microsoft needs to be disbanded or separated in to two different operating companies? Not really.Like I said before, I enjoy Microsofts products and I use them constantly. In fact, I am writingthis paper using one of Microsofts products, Microsoft Word. I just honestly think that fair competition and a level playing field for Microsofts competitors would only benefit the consumer in the long run. More people with new insights will be given the happening to expand the technology already in place. Too many companies are neural about taking on Microsoft because of the monopoly and the idolatry of being annihilated.Finally, I have learned that cases of anti-trust and monopoly are not always as clear cut as one may think. I always thought that Microsoft had a clear monopoly and that there was naught any of us could ever do to remedy it. I also really didnt care as long as they continued to improve Windows and the incident Office Suite. I can see now that competition in all economic arenas, whether it is cable television or fast-food or computer software, is important, no vital, for lower prices and increased technological growth.