| Beginning in 1997 the US government began to probe Microsoft on issues regarding the anti trust laws of the United States. The suits started with a suit from Borland Inc. on May 7th. In the suit Borland claimed that Microsoft intentionally lured away some 34 of its employees, keeping it from recovering from a financial loss the year before. In the following onslaught of lawsuits, some 19 states filed class action lawsuits against Microsoft. The Supreme Court heard strong cases from either side. While Microsoft claimed that it had not practiced any illegal practices, only good business, the government attempted to convince the Supreme Court that the company had used tactics set aside as illegal by the Sherman Anti Trust act. The trial lasted for over a year, as each side battled bitterly for its ideas in this important case. Microsoft claims that throughout the company’s life, they operated within the rules of the government. They claimed that, using standard business practices, they have been able to control the market due to the superiority of their product. Microsoft believes that it is not a monopoly and any company who wants to put out another software operating system is able to do so. As Bill Gates stated, “the only thing we have done is improved Windows for the consumer” (1999). Microsoft claims that the high price of their operating system is due to the high cost in the development of the product. Microsoft attempted to persuade the Supreme Court of this position in the case. In the end, however, the government had apparently succeeded in convincing chief Judge Thomas Penfield Jackson as well as the rest of the Supreme court that Microsoft is by classic definition, and by what is set forth in the Sherman Antitrust Act of 1890, a monopoly. The judges decided that, according to the current laws of antitrust, Microsoft Corporation has wielded monopoly power. On November 5, Judge Jackson released a Findings of Fact, which virtually mirrored the government’s main arguments. In his Findings of Fact, Jackson stated that Microsoft has been developing operating systems since the early 1980s and has been improving upon them until the operating system released most recent to the findings’ publication, Windows 98. Jackson continued that Microsoft is the leading supplier of operating systems (OS) for Intel-compatible PCs, which in the current business world there is no substitute for. Microsoft has almost established itself as the only OS supplier for Intel PC’s, thus they can set the price of windows higher than it would be under competitive market conditions. Judge Jackson believes that they have set the price much higher than it should be because of the lack of substitutes for the Microsoft OS. Consumers do not want to purchase another OS because they have been trained on Windows and there are a wide variety of applications to use. Developers do not want to invest in developing another OS unless there is a market for it and they know there currently is not one. Therefore, Microsoft is the only main OS supplier and there are no signs that they will be challenged in the near future. Jackson further states that Microsoft “enjoys monopoly power in the relevant market”(1999). He continues saying that Microsoft’s share of the market for OS is large and stable, that there are high barriers to entry in their market, and customers lack alternatives to windows. Microsoft also does not need to look at the prices other firms charge for their OS. In addition, Jackson asserted that Microsoft practices price discrimination in the manner that companies are able to buy their software for cheaper than the consumer. |