Ethics and Social Responsibility at Microsoft

This section opens up by covering all the ways Microsoft has contributed to what the author has claimed to be a “positive reputation”. It covers everything the company has done to give back to society and how the company prides itself on its ethical standards, antitrust compliance and responsible competition. Microsoft is even quoted in the case that “it is committed to responsible and sustainable business practices that consider the social and environmental consequences of its actions”, but this after a decade of ethical and legal problems stemming from antitrust issues and several patent infringement complaints. The question is, would Microsoft have such a “positive reputation” today if we didn’t have the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914 and if the Federal Trade Commission never began investigation Microsoft back in the early 1990s.

Legal Issues Impacting Microsoft

In the United States, Courts have held that a market share below 50% precludes finding monopoly power, and the leading treatise suggests that a share of over 70-75% for at least five years is required. While the law in the US allows creation of a monopoly, the courts have interpreted this to mean that monopoly is not unlawful “per se”, but if acquired through what the courts consider prohibited conduct, then it is unlawful. The Supreme Court also says, that a monopoly may engage in practices that any company, regardless of size, could legally employ; however, it cannot use its market power to prevent competition. Competitors, government regulators and I believe that Microsoft was acting as a monopoly power and engaging in unfair and unethical competition.

In this case study, the appeals court held that Microsoft went beyond the boundary of normal commercial practice. Specifically, the fact that Microsoft withheld or threatened to withhold its Windows operating system from other competitors was considered to be a “manifestation of exclusionary conduct”. This meant that if any customer, whether it be an internet service provider or a computer manufacturer, dealt with Netscape, internet explorer’s chief competitor, Microsoft would withhold Windows, charge a higher price, or penalize that customer in some other way. Microsoft used its muscle in the OS market to effectively destroy Netscape in the browser market and preventing new competition by bundling its own browser internet explorer with Windows. Microsoft continued to battle with other companies over the years, to include Sun Microsystems, Novell, Google, Inc. and a Canadian software company i4i that resulted in a $290 million penalty for patent infringement by Microsoft.

Conclusion Although Microsoft has recovered from its unethical and illegal business practices by being changing the way it does business and being socially and environmentally responsible, it will continue to deal with competition from other companies that will lead to many more legal battles. Microsoft will have to continue to be cautious in its business practices, but still be aggressive in R&D, innovation and expansion if it want to keep up with companies like Apple and Google.