Microsoft Vs. Doj
Microsoft vs. DOJ
Arguments of the DoJ (the white paper)
1. Microsoft and it´s Monopoly Power
MS monopoly power is in personal computer operating systems. A PC operating system as you all know controls the interaction of the different parts of the computer. It creates files, organizes the computer´s memory and creates a platform for applications.
The operating system is indispensible to the computer for this reason. Maybe that changes as technology evolves but right now a computer without an OS is nothing but a box of inert hardware. MS today ships 97% of PC OS that are installed by computer manufacturers.
Case law defines monopoly as beginning at about a 70% share of the market.
But this alone isn´t illegal in respect to superior products, service or mere luck. Nor does market share alone necessarily imply monopoly power. For example a manufacturer might make 100% of knickers on the market. But if there are other pants manufacturers who are able to turn their production into knickers, the one and only knickers producer wouldn´t be able to charge more than a competitive price or exclude rivals from his market.
Speaking of this little example it´s now clear what monopoly power means: it is the power to control prices and exclude competition. MS has and still exercises, both form of monopoly power. It charges above competitive prices and use tactics that eliminate rivals. And not because MS are superior to others and more beneficial to the consumers. No, not at all, MS uses predatory tactics whose sole purpose is to destroy it´s rivals.
MS often has denied that it posesses monopoly power but their arguments are quite feeble.
A MS spokesman stated that the market is highly dynamic and that there are only low barriers to enter the market, especially for fringe firms. But this is untrue for the means of competition.
There might be a lot of new technology but the barriers MS deliberately put up made it impossible for new market entry. The result is that MS can charge higher than competitive prices without a loss of market share.
Another argument of MS is that it´s monopoly power is defeated by ist need to compete against it´s own installed base meaning that MS has eg now to compete against win 95.
But this is another partly untrue argument because most consumers think of a new OS only when they want to buy a new computer and replace their old one. With that consumers expect that the replacement will come with an installed operating system. Therefore competition among operating systems, if it were allowed to exist, would be competition to have computer manufacturers install operating systems on a new machine.
2. MS employs exclusionary tactics to maintain it´s monopoly
MS exclusionary war proceeds along two lines. First it has built it´s browser, the IE, into it´s Win OS and will not allow computer manufacturers to remove it.
Second, MS employs a complex web of restrictive agreements designed to block the entry or growth of rivals.
To say something about the history. The Browser War Netscape produced the first browser, the NN, which made searching the internet practicable for the average computer user. Thus the Navigator posed a serious threat to MS monopoly because NN created the possibility of a system that would bypass the Windows OS. Meaning that a browser with a large number of users can become an alternative platform by combining it with eg. Sun Microsystems programming language Java. Together Netscape and Java could reduce Windows to just one OS among several others.
Microsoft recognizes the danger at once: Netscape/Java is using the browser to create a “virtual OS” and that a competing browser could eventually obsolete Windows. Naturally MS didn´t like the idea and counterattacked. It developed ist own browser the Internet Explorer.
When the IE failed to push the Navigator out of the market MS joined it´s browser to the OS, first with win95 and now in win 98 so that computer manufacturers are forced to take both in one package. MS makes no extra charge for the browser, pricing it at zero, thus selling it below cost. A MS spokesman even stated that if they were forced to offer ist OS and its IE as seperate products, the company would still charge