Microsoft vs United States
Antitrust proceedings was started in year 1890 by Senator John Sherman . The law was needed to protect the consumers by preventing arrangements designed . On 2 July 1890 Sherman anti trust act was signed into law by President Benjamin Harrison.
Everyone wanted to outlaw monopolies and create competition , but there was a serious disagreement about which part of the constitution was the legal basis for outlawing illegal restraints of trade . Hence antitrust law changes according to mood of legal opinion. It has always remained one of the most politicised portion of legal code. What was illegal in 20th century may not be illegal today.
Bill Gates , as computer scientist was used to solving problems by applying algorithms , but law is not an algorithm that can be interpreted the same way each time and there is no ” Ethics algorithms”
Microsoft with sales of $55 million in 1983 was of the most successful software companies by 1984 . Claiming more than million installed MD-Dos machines , it was recognized as the most influential company in software industry . Insiders used to think that Microsoft was attempting to be IBM of the industry . Gates strategy for dominance involved new operating system
In year 1992 US government ‘s interest in Microsoft began with enquiry by FTC ( Federal Trade Commission) .They were interested to know whether or not Microsoft was abusing its monopoly on personal computer system market.
Three crucial facts which will help us understand the scenario better is
Microsoft possesses power in the market for Personal Computer (PC) operating systems;
It engaged in a wide-ranging effort to protect its operating system monopoly, utilizing a full array of exclusionary practices
Microsoft’s actions were harmful to innovation and to consumers.
Issue of low price
It was also distributing Internet browser software IE, free with its window operating system. As it was a late entrant into software market it was marketing itself aggressively to catch up . Netscape protested against Microsoft’s move as they thought it was an attempt to shut out other software that competed on standalone basis . Another, charge against Microsoft was that it had modified Sun Microsystems’ Java language in order to make it compatible with Windows .The case will be appealed no matter who wins , If the government wins , it has already specified it wants to Microsoft and if Microsoft loses the industry analysts expect the company to remove internet explorer software and replace it with Netscape’s software in Windows98.
It’s difficult to speculate on the company’s possible stock performance should they lose the case. Microsoft’s stock price dipped during the recent market turmoil but has stayed relatively level throughout the investigation. Negative publicity hurts and can erode sales it will make it harder for company to do business .The commissioners closed the investigation with 2-2 votes in year 1993 but was reopened in year 1994 by Janet Reno head of department of justice ,which resulted in settlement on 15th July 1994 in which Microsoft agreed not to tie other Microsoft products to the sale of windows . But it remained free to add additional features into the operating system . Coming year it insisted that IE was a feature not a product which was allowed to add to Windows. Final Judgement entered in 2002 and these imposed various constraints on our Window which included limits on certain contracting practices , disclosure of certain software program interfaces and protocols. And rights for manufactures to limit visibility of Widows features .
June 2000 , district court judge in US for the district of Columbia ruled that Microsoft should be broken into two units – one for operating system and another for software product. But the proposal was disagreed .As Microsoft was prohibited from tying Internet Explorer to windows, it allowed browsers like Firefox and Netscape to compete , it also created room for Google and Facebook to grow.
This case offers a number of complicated lessons but not all of them are encouraging. Microsoft focused on product sold for fee unlike google and Facebook who offer products for free . These free product don’t directly harm wallets.
It comes down to two things : Engagement of defendant in anti-competitive conduct and what effect does it have in creating market power that defendant will not have in absence of conduct.Antitrust advocates should shift American Legal and judicial understanding of working of antitrust law to apply to today’s giants . The lawsuit played a significant role in opening up the field for new or small tech companies. Microsoft was more bureaucratic when it comes to decision making “move fast and break things” industry disruption principle could no longer apply.
Microsoft survived the case but emerged from the proceeding drastically .The key to Microsoft’s consumer business strategy is interoperability to move between platforms and products . It focused on protecting its market share .One most important lesson is that antitrust lawsuits against tech behemoths are possible. Regulation is bad for the economy is the common trope in Silicon Valley but regulation can also be a tool to spur economic development . Section 230 shields tech companies from responsibility of what happens on their platform , which exemplifies how law can help innovation.
If Microsoft’s power were not curtailed it’s impossible to know how exactly the world would look like, as we know people have buffet of browsers to choose from. In the competitive ecosystem companies which were able to grow created jobs and pushed industry forward .
A new generation of tech giants are rising and it may be time for government to step in once again.