FREE ESSAY ON ANTITRUST ACT

ANTITRUST ACT

Anti-trust Acts in the Information Age As many people have noticed, recently there has
been a huge focus in the media on Bill Gates, and his huge Microsoft Corporation. This
past Friday, May 22, 1998, a federal judge combined two lawsuits and set a trial date for
September 8, 1998. This trial date will address a government request for a preliminary
injunction concerning Windows 98 as well as broader issues. The Sherman Anti-trust Act
was passed in 1890. Then in 1914 the Clayton Act was passed to help with Anti-trust
Cases. Anti-trust Lawsuits are few and far between, but recently cases against Microsoft
are stacking up all around the world. In 1890 the Sherman Anti-trust Act was passed, but
it was not until much later that it was enforced. The Act stated every contract,
combination in the form of trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States, or with foreign nations. The Sherman Anti-trust act
was too vague and too difficult to enforce. The Clayton Act of 1914 helped this problem
by making a more specific attack on monopolies. Things like predatory price-cutting,
price discrimination, and acquisition of stock in a competing company with intent to
destroy competition all became illegal. John D. Rockefeller is a prime example of
monopolies in US History. By buying out competitors, or driving them out of business he
obtained nearly 100 percent of the market in oil refining. The Standard Oil Company was
eventually forced to dissolve into smaller companies after the case Standard Oil Company
vs. United States, 221 U.S. 1 (1911). Before this case the Anti-trust Laws had not been
put to much use, which was not to the benefit of consumers. Now the spotlight is on
Microsoft Corporation, and their apparent attempt to take over the Internet browser
market. Concerns aroused recently because of the expected release of Windows 98, which
uses Microsoft Internet Explorer in almost every application it runs. The US government
has seemingly acknowledged Microsoft's monopoly of operating systems and let it go by
because of lack of competition in the market. But now new issues are at stake, should
Microsoft be allowed to expand its already almost monopoly into yet another field in the
computer industry? With the incorporation of Microsoft Internet Explorer into the
Microsoft operating system Windows 98, Netscape Communications Corporation felt
vulnerable, and filed complaints with the Justice Department. Once the investigations
were initiated, it seemed flocks of people jumped the bandwagon to attack the alleged
Microsoft Corporation Monopoly. 20 State Attorney Generals and the District of Columbia,
along with the Justice Department have filed against Microsoft Corporation. Japan has
also filed an Antitrust Lawsuit against Microsoft. It seems that everywhere Microsoft is,
there looms a bit of concern for the consumers and their futures. Currently 90 percent of
the world's personal computers run on Microsoft operating systems. The remaining ten
percent of the industry is divided between Apple's Macintosh, IBM's OS/2, and Unix. The
federal and state antitrust regulators are arguing that Microsoft has illegally used the
popularity of its operating systems to eliminate its competition in the software
industry. Many economists feel that these lawsuits against Microsoft Corporation could be
as revolutionary as those against Bell Telephone in 1984 and John D. Rockefeller's
Standard Oil Company in 1911. Microsoft Corporation however, disagrees, arguing that the
changes being demanded by federal and state government will take months to perform and
would cause the software to be useless. Microsoft clings strongly to their beliefs that
Windows 98 cannot succeed without Internet Explorer. Such an operating system - which
would take many months (if not years) to develop and test - would bear little, if any,
resemblance to Windows 98 because Internet Explorer technologies are such a critical
element of that product, Microsoft wrote. Although it may be true that Windows 98 is
based around Internet Explorer, should the government allow Microsoft to sell its product
and gain more market share? One option that federal and state governments gave Microsoft
was to have the Windows 98 package be sold with the Netscape Navigator Browser,
Microsoft's main competitor. This request was seen as ridiculous by Mark Murray, a
spokesman at Microsoft headquarters, who has been quoted as saying, that's like the
government forcing Coke to put two cans of Pepsi in every six-pack. The only choices
being offered to Microsoft at this point are to unbundle Windows 98 and Internet
Explorer, or to add in the Netscape Navigator Browser. The unbundling process is what
Microsoft Corporation says will take seven months to handle, and therefore had asked for
a delay for the court dates. The federal and state governments were demanding immediate
court dates to assure that Microsoft would not be able to market Windows 98 as it is now.
A compromise was made between the two differing requests, and the court date was set for
September 8, 1998. Some foresee this as an advantage for Microsoft who will be able to
sell their products through September. But the federal and state governments are happy
that the court is not allowing them to go through the immense Christmas buying frenzy as
well. It is most likely to the advantage of Microsoft more so than the government that
the date was set for September, but only time will show what happens. These lawsuits
allege that Microsoft Corporation is using its power with Windows 98 to stomp out any
competition to the Microsoft Internet Explorer web browser, especially that of the
Netscape Navigator Browser. Microsoft undoubtedly feels that they are only supplying
consumers with the highest quality product for its value. When you consider that the
Internet Explorer will be free compared to the Netscape Navigator Browser which must be
purchased, it seems obvious whom the consumers will favor. Although the Internet browsers
are the main focus of the Antitrust suit right now, there are other small details that
have been somewhat overlooked. For instance, the government alleges that Microsoft forced
computer makers to set up computers so that users saw the Windows logo whenever they
turned on their machine. There is also evidence hinting that Microsoft tried to get
Netscape to collaborate in order to avoid competition in the browser market. Netscape
however, turned down the offer to join in an illegal conspiracy. Microsoft has been put
under a bright spotlight where consumers are beginning to question the corporation's
intent. It only seems natural that Microsoft would defend themselves with a large public
relations campaign. For a company such as Microsoft, where the company name is also the
brand name, it is extremely important that the public views them in goodwill. The new
series of television commercials that Microsoft Corporation is broadcasting are designed
to illustrate how Microsoft is helping the public. This type of campaigning is known as
image advertising, it is designed to encourage goodwill toward the company, rather than
sales of their products. So far there is little evidence to indicate that Microsoft has
lost any support from the public due to the antitrust lawsuits. At best it seems that the
Microsoft Corporation antitrust lawsuits are at a standstill until September 8, 1998. For
the consumers' benefit, we can only hope that the US Supreme Court will rule in favor of
the federal and state governments. If Windows 98 is released without being unbundled then
the future of the information age, and all Internet related technologies will be forever
changed. When there is no longer competition with Microsoft in any fields in the computer
industry, then the consumers will be left with no choice but to support Microsoft no
matter what happens. Prices could sky rocket, quality could plummet, and all because the
monopoly could not be stopped until it was too late. Although Microsoft products might be
better, especially when using them intertwined with one another, the elimination of
competition - intended or not - is never to the benefit of the consumers. Bibliography 1.
Goodin, Dan; Microsoft Trial Date: Sept. 8; CNET NEWS.COM; May 22, 1998. 2.
http://www.us-history.com/chpt_4.html 3. Paulson, Michael; Microsoft Takes Fight to Court
of Public Opinion; Seattle Post-Intelligencer, May 20, 1998. 4. Paulson, Michael;
Microsoft Says Changes Sought Would Render Windows 98 Worthless; Seattle
Post-Intelligencer; May 22, 1998. 5. Rowley, James; Microsoft Suits Are Filed; Bloomberg
News; May 18, 1998. 6. Rowley, James, and Squeo, Anne Marie; Microsoft Loses Bid to Delay
Trial of Antitrust Suit; Bloomberg News; May 1998. 7. Squeo, Anne Marie, Microsoft Seeks
7-Month Delay to Respond to Antitrust Suit; Bloomberg News; May 21, 1998. 8. Zitner,
Aaron; Antitrust Suits Expected as Microsoft Talks Break Down; The Boston Globe; May 17,
1998.