Microsoft: Bully or Genius? Were the Antitrust Penalties against Microsoft Sufficient or not?
Since 1998, Microsoft has been involved in an antitrust lawsuit filed by the European Commission. Microsoft was initially charged with failing to provide interface code that would see competitors peg into its Windows server software at a rational price. The European Commission claimed the prices for accessing the code were extortionate, and this led to non-compliance. Microsoft won the law suit but later on in 2009 accused of allegedly bundling its own web browser- Internet Explorer- within its operating system (Kanter, 2012)
According to Judge Jackson’s part of the establishment of facts in the Microsoft case, the company was accused of possessing monopoly powers; protecting its own operating system monopoly and undertaking actions that were deemed harmful to consumers and innovation (Department of Justice, n.d.). In the antitrust cases that Microsoft has been involved in, the company had to part with around one to two billion pounds.
The economy of the United States of America is based on the assumption of a free market. As such, people are at liberty to engage in businesses of their choice, spend their money on whatever activities or goods they desire and also do the work that they desire (Department of Justice, n.d.). The supply and the demand levels of a product are core in determining the price of that particular product. The United States market, in a greater part, creates economic situations that are actually efficient and fair.
As the market progresses positively and in the right way, competitors tend to offer similar products and services to the consumers. The availability of a wide range of choices for the consumers leads to the price reduction of products. The interaction of the consumer demand and the competition to supply goods creates an efficient and fair price in a market. In a market where there exists no competition, monopoly sets in.
The Windows operating system, which is owned and distributed by Microsoft, is very popular in the market. To some extent, it does not mean that there are no other competing firms that cannot outdo the Microsoft-owned operating system. For instance, Linux and Macintosh have emerged to be favorable competitors in the operating system and computer market.
Having a market share of about 90%, the Bill Gates-owned firm can set higher prices and limit the supply of goods making the competitors shy away from the market. Lawfully, a monopoly exists if a firm forces competitors out of the market through bribery, reducing prices, intimidation, buying up and hoarding products (Department of Justice, n.d.).
Despite Microsoft having some power and influence in the market, the company’s product development strategies and pricing of its products do not match those of a monopolist. In comparison to a competitor such as Apple, Microsoft has lowered the price of its own world’s most-selling operating system and also enhanced its performance and usefulness.
In penalizing the firm with such huge fines, there a number of market considerations that were overlooked. In its propositions, the company targets to increase long term profits by integrating its browser in its operating system. Microsoft is neither a bully nor a monopoly but just expressing some success in conquering the market with a large share (Levy, 1999). The penalties issued against the firm were not justified. In this regard, the company is within the necessary framework to exercise its function in the global market.
References
Kanter, J. (2012, October 24). European Antitrust Officials Say Microsoft Violated Deal - The New York Times. Retrieved from http://www.nytimes.com/2012/10/25/technology/european-antitrust-officials-charge-microsoft-with-violation.html?_r=0
Levy, R. A. (1999, January 19). Microsoft is no monopoly | Cato Institute. Retrieved from http://www.cato.org/publications/commentary/microsoft-is-no-monopoly
