Microsoft Corp.’s Pricing Policies Essay

Executive SummaryThis causa study foc social occasiond on the Microsoft mass and charges made by their competitors, the Federal cope Commission, and the Department of jurist of fair infractions and a monopoly of the computer operating arrangements and applications software, software knowledge tools (e.g., programming row software), and with child(p)ware peripherals (e.g., Microsoft Mouse) that Microsoft specializes in. It focused on numerous issues that would lead one to take that Microsoft was in concomitant monopolizing the entire industry they were in. .In order to adequately discuss and analyze the issues of this exemplar, I begin broken this paper up into four separate sections. variance 1 Key Terms & Concepts verbal description of the key name & concepts that pertain to this chance parting 2 The fibre Against Microsoft Identify the facts and reading that support my case against Microsoft office 3 The excuse of Microsoft Identify certain facts and in imprin tation that support a defense of Microsoft role 4 Discussion What I pass learned from the case later on reading this case study, I went back to the email that I received from you and went over the straitss that you suggested we con perspectiver. The startle question was If you were the DOJ how would you build a case against Microsoft or a dominant leader? I leave behind effort to do this in persona 2 The Case Against Microsoft. The second question was If you were Microsoft how might you defend yourself against DOJ claims? I will cover this in Section 3 The Defense of Microsoft. I will attempt to interpret why it was genuinely necessary for the DOJ to bring 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 have non created a monopoly.Section 11. Key Terms & ConceptsThe reason I decided to include these terms and concepts was to confuse it easier for me to wri te this paper and use certain terms without describing them severally season I used them in my paper.Department of Justice, Antitrust form The Assistant Attorney General for Antitrust, a presidential appointee, ran the Antitrust member of the DoJ. When the Division archetype the evidence was sufficiently persuasive, it brought criminal charges. The Division as well entered into negotiations with businesses to end litigation in exchange for consent decrees in elegant cases, or nolo contendere (no contest) please in criminal casesDOJ Department of Justice The joined States Department of Justice (DOJ) is a Cabi winnings department in the United States government designed to enforce the law and defend the interests of the United States according to the law and to ensure fair and impartial administration of evaluator for all Americans (http//en.wikipedia. Org /wiki / United_States_Department_of_Justice)DOS Disc operating(a) SystemFTC Federal Trade Commission The FTC enforces fed eral antitrust and consumer protection laws by investigating complaints against item-by-item companies initiated by consumers, businesses, congressional inquiries, or reports in the media(http//en.wikipedia.org/wiki/Federal_Trade_Commission)ISVs Independent Software VendorsMS-DOS Microsoft in operation(p) SystemsNDAs Non-disclosure agreementsOEMs Original Equipment ManufacturersOS Operating SystemsPC Personal ComputerSherman Anti-Trust actuate it made illegal any form of contract or conspiracy between entities in regards to trade and handicraft that would have the effect of restraining trade. And it similarly put responsibility on government attorneys and district courts to pursue and enquire trusts http//en.wikipedia.org/ wiki/ Sherman _ Antitrust_Act)The Clayton Act of 1914 The Clayton Act was designed to prevent monopoly in the beginning kind of than to remedy its effects. To accomplish this goal, Congress authorized antitrust prosecutions whenever business practices may substantially lessen competition or tend to create a monopoly in any line of commerce, in any section of the country.Section Two of the act forbade sellers from discriminating in price selling goods of deliverardized grade and quality to different buyers at different prices when such(prenominal) differences were incomplete cost justified nor necessary to meet competition. Section Three trammel the use of tying and exclusive dealing contracts. Tying contracts required purchasers or leases to acquire a second, separate product in order to retrieve the desired product. Exclusive dealing contracts obliged a purchaser or les memorise not to deal in products of competitorsVaporware is software or hardware which is announced by a developer well in advance of release, solely which then fails 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 produ ct development is in too early a stage to support obligated statements nigh its completion date, feature set, or even feasibility (http//en.wikipedia.org/wiki/Vaporware)Section 22. The Case Against MicrosoftIn order to make my case against Microsoft and dig up that they are most assuredly in violation of monopoly and anti-trust regulations, I will answer the following 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 view about situations where I was absolutely sure I had been the dupe of a monopoly. In order to do this, I first had to make sure that I fully understood exactly what a monopoly was. The American Heritage Dictionary defines a monopoly as Exclusive entertain by one group of the means of producing or selling a commodity or divine do. In simpler terms, I have of all time thought of a monopoly as a big corporation doing its best to scr ew-over the flyspeck guy (A.K.A the guest) by doing its best to make as much silver as possible.The first situation that came to mind when I thought of a monopoly was how the Comcast melodic phrase family 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 only cable provider in our area, you were forced to settle for Comcasts service unless you had satellite television or you were unstrained to settle for the marvelously fuzzy reception from the antiquated rabbit ear antennas of years past.As a result, we unfortunately had to deal with Comcasts horrible service and al ways rising rates. Luckily for us, another competitor came in to the picture when screech (Wide Open West Internet-Cable-Phone) set up service in our area. We switched cable providers almost immediately and we couldnt have been happier. They have provided excellent customer se rvice and their rates are consistently lowerthan Comcasts. As a consumer, we definitely benefited from the increased competition and eventual abolishment of the cable social club 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. base on the information in this case, I cannot say that Microsoft has a monopoly on any individual(a) entire industry. Do they dominate the majority of endeavors that they choose to participate in? Of lineage they do. Just look at some of these numbersAs you can see from Table 1, Microsoft dominates the market shares of suite software in the United States. The only problem with these numbers is the fact that they are express mail in their time range. In my experience, three years is a enormous enough time to make an approximate forecast for future happenings, from a financial standpoint. However, that is from a transportation and supply-chain perspective where th e main variable happens to be the customers delightping fluctuations. In a volatile and forever and a day evolving market such as software development, these numbers could sway hugely with the introduction of a new and sought after product or changes in consumer wants and desires.Table 2 shows the financial numbers of Microsoft and three of their competitorsThis withal tells a lot about Microsofts market dominance, but this time from a financial standpoint. Two things that stand out to me in this plug-in 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 return of Microsofts competitors (which there are more than one), I feel confident in saying that Microsoft does not have a monopoly in their industry. They do not meet the standard set forrard by t he 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 clearly 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 galore(postnominal) other counts, one of which is that Microsoft Windows, the Microsoft OS, is installed on most personalized computers 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 choice and there is not much of an ersatz for us to go with unless we want to switch to an Apple Macintosh OS. Although Microsoft isnt a natural monopoly in the classically defined or sparing sense that Ive set above, it is a natural monopoly in the bestow of cyberspace. Microsoft is the path of least resistance for government, consumers, and programmers alike. Microsoft may have many faults, but they make a lot of things easier too.Most of us are willing to accept a monopoly such as Microsoft has for increased convenience and usability. Microsoft is a one-product high society, no matter how it may sometimes appear. Their success is fundamentally due to the success of Windows. It rose to power with one product, and it resides there because of the success of that product. alas for us, this is not only the best product on the market, it is the only align alternative for us to use. In my book, regardless of the textbook definition, this constitutes a monopoly by Microsoft.Is this a case a violation of the Sherman Anti-Trust Act?As I stated 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 calendar week 7, there is proof that Microsoft did violate 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 monopolize.Microsoft violated the Sherman Anti-Trust Act by illegally use its market power to restrain trade in the high technical school industry.A filing from the DOJ on December 19, 1999 stated that Microsoft act in illegal conduct in five separate ways* by tying browser 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 wondrous exclusive dealing arrangements between itself and Internet service providers and/or developers and* by imposing 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 through with(p) t hat clearly violate the act include, but are certainly not limited toMicrosoft customers upgrading their copies of Microsoft Office at the Microsoft website, but using the competitions web browser, are greeted with a message insisting on the use of MSIE for the full edition of the update.On November 18, 1998 the digital greeting card company Blue the great unwashed Arts discovered that beta interpretations of Microsofts observation tower Express (which comes free with Internet Explorer) were automatically filing Blue Mountains e-mail greeting cards into the junk folder quite than the inbox. Shortly 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 completelyintegrated into Windows to remove it was equal to breaking the operating system.-All three of these examples were taken from the following 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 convenient for Microsoft to say that their success is solely base on them world able to produce good products. Although they do gift extraordinary resources to improving their technologies, they also work diligently to stifle growth and in-roads from their competition.Section 33. The Defense of Microsoft I am not sledding to spend a great deal of time attempting to defend Microsoft. They have spent millions and millions of dollars working tirelessly to do it themselves. Furthermore, I firmly imagine that they have established a monopoly and that this monopoly serves to futher one parties interests Microsofts. However, I did some interrogation online and came up with the fo llowing paragraph from an article titled The Microsoft Antitrust meet written by Peter Tracey.In it, he wrote The persecution of Microsoft is an assault on the free market, and on the intelligence of the American people. It is the result of long-held envy by Microsofts competitors, including Netscape and Oracle. It is in violation of the constitution, being both ex home facto and vague (Getman). The governments persecution of Microsoft should be stopped, moreover, the antitrust legislation that has exposed business to cheating(prenominal) and unreasonable practices should be repealed. (http//www.levelthreesolutions.com/ peter/msantitrust.html)In Microsofts opinion, the government should not get involved in determining what means a company uses to produce their products. They feel that they have been able to succeed 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 o f 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 making them better. Microsoft doesnt monopolize the industry. They simply work harder, take risks, and profit where other companies have floundered.Section 44. Discussion Before I discuss this particular case study, I must tell you that I have eternally been a big fan of Microsoft and Bill Gates. I have enjoyed the relatively cheap cost of Microsofts software such as Microsoft Excel and Word. I have also felt that with to each one successive upgrade of these products I have only been able to remedy my performance both at work and school. I also thought it was impressive that Bill Gates could take his ideas, push forward with his undefeatable will, and beget one of the richest people in the entire world. However, this case study and the analytic thinking that Ive done with it has really opened my eyes to the seamy side of M icrosoft and Bill Gates.I was so moved by this case that I even went and downloaded one of Microsofts few internet browser competitors, Netscape, to discriminate 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 said it so perfectly Duh, of course they are. Even I know that. I think this says it all so succinctly. Do I think Microsoft needs to be disbanded or scattered 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 precondition the chance to expand the technology already in place. Too m any companies are skittish about taking on Microsoft because of the monopoly and the fear 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 nothing any of us could ever do to remedy it. I also really didnt care as long as they continued to improve Windows and the resultant 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.