Antitrust Claims
Antitrust laws were put in place to preserve competition as the rule of trade. Microsoft was accused of violating antitrust laws, and engaging in anti-competitive behavior by illegally using its Windows operating system monopoly. Netscape contended that Microsoft’s anticompetitive practices caused anti-trust injury by violating the Sherman Act.
The Sherman Act
The Sherman ACT of 1890 prohibits every contract, combination, or conspiracy that restrains trade, or any attempted or actual monopolization or conspiracy or combination to monopolize. While the Sherman Act does not ban all forms of trade, it does stop those that are considered unreasonable. Fixing prices, rigging bids, and dividing markets are all considered violations of the Sherman Act (Anonymous, 2012). It is not illegal for a company to have a monopoly in their industry. However, if the organization attempts to hold their monopoly status through ventures that exclude other companies from having a hold in the market, then the Sherman Act comes into play.
Microsoft
As most of the world is aware, Microsoft is a monopoly. AOL Time Warner accused Microsoft of engaging in illegal practices to maintain this monopoly (Well & McMillan, 2003). The alleged anticompetitive practices pertained to their Windows operating system. The suit claimed Microsoft held its position as a monopoly in the personal computer operating trade by unlawful exclusionary conduct (Ohlhausen, 2008). In layman’s terms, Microsoft required other products they manufactured to be utilized with their operating system. They also created agreements that prohibited companies from purchasing competitor products, or working with competitors.
The United States Court of Appeals affirmed the decision that Microsoft did, indeed, violate the Sherman Act. However, they could find no justifiable evidence to prove that Microsoft gained its monopoly via illegal means (Ohlhausen, 2008). In a settlement, Microsoft was required to pay AOL Time Warner $750 million (Well & McMillan, 2003).
Analysis
I believe that Microsoft did, in fact, violate the Sherman Act. I base this on the court’s findings. Microsoft’s license restrictions did not allow OEMs to remove desktop icons, folders, or altering any portion of the desktop. Therefore, the OEMs could not distribute any browsers other than Internet Explorer. Microsoft also made it almost impossible to remove Internet Explorer from the Windows operating system, which gave them a strong foothold in the operating system market. These are just a few examples of how Microsoft manipulated the market. The most interesting facet in this case is that Microsoft is still the most well-known brand name in the world. A $750 million judgment is a drop in the bucket for this organization. As the technology market continues to change, Microsoft adjusts accordingly. Windows is still the most utilized operating system, and Microsoft’s monopoly has not faltered.
Conclusion
Although Microsoft violated the Sherman Act, the court’s decision had no real effect on their financial base. The company continues to grow and change as trends arrive and fade. Perhaps this is an example of one company pushing the limits.