The anti-trust laws against Microsoft by the US and the European Union because of its dominance in the market. Given that Microsoft is a monopoly and due to this fact, the company can hold process above that marginal cost in order to get more profits. Microsoft, which is owned by Bill Gates, is one of the most valuable companies because it reaps a lot of profit from its sales. It is crucial to note that that the anti-trust laws were invented by the government to control major industries in the market. Given that a large market share demonstrates more power in terms of economic capability, both the EU and US governments posed high fines against the Microsoft for violating anti-trust laws. Microsoft was accused for violating antitrust laws in two major ways: Microsoft restricted the ability of linking Windows PCs and other servers that are not associated with Microsoft and linking the Windows Media Player with its Windows interface system. This paper will examine the anti-trust laws imposed against the Microsoft by US and EU as a way of regulating its market economic power. The European Commission accused the Microsoft for using its market power to manipulate other non-Microsoft work group servers. The EU imposed a monetary fine of €497 million against Microsoft for violating the anti-trust laws.
As a result, the EU demanded Microsoft to change its interface settings such that non-Microsoft work group servers could have interoperability with the windows PCs. It is crucial to note that Microsoft controls more that 90% of the market share with their PC innovations and software. Due to the fact that the Microsoft was a monopoly that had too much power, little to no competition was felt by Microsoft because of their restrictions against non-Microsoft work group servers to use the Windows PC. Microsoft controlled most applications such word and excel which created a barrier to entry by other companies. Thus, for a long Microsoft had little to no competition which contributed to its rise in its market power. The EU became concerned with Microsoft’s heightened market power that prohibited competition. Thus, the EU introduced the anti-trust laws against Microsoft to instill competition in the market. Also, the EU was concerned that Microsoft intimidated other non-Microsoft companies because they already controlled most of the market share. Thus, EU wanted to program a market situation that would benefit both the greater community and innovators in the market.
The US also probed Microsoft for setting unreasonable prices that did not leave any room for competition thereby, breaking the anti-trust laws. Microsoft fell under the US radar supervision in the 1990s where the US justice department authorized Microsoft to ensure that they wipe away all contracts that made competition impossible. Like the EU, the US did not like the fact that that Microsoft bundled all its applications to their Windows PCs, which limited companies that had non-Microsoft servers. In 1994, Microsoft made a settlement with the Justice Department where Microsoft removed their contracts with the Windows PCs manufacturers as a way of ensuring that there is room for competition in the business market. Competition is important because it gives room for new innovations. Regardless of the settlement, Microsoft breached the settlement when they bundles Internet Explorer to the operating system that were manufactured by windows PCs. Microsoft had made an agreement with the computer manufacturers to use their operating web-browser application during PC manufacturing. Microsoft ensured that they had continued dominance in the system operation business that breached the anti-trust laws according to the Justice Department. Given that Microsoft bundled its operating system with a web browser, Explorer, the PC manufacturers could not incorporate other rival web browsers in their PC manufacturing. Thus, the justice department felt that Microsoft had breached its settlement with the courts.
Also, the Justice Department believes that Microsoft was over-stretching its monopoly power in both the PC market and web browser. Microsoft had set up its system to have an in-built web browser that could not be removed from the PC applications. This made the courts to apprehend that Microsoft should be split in to two individual companies because of their emphasis in becoming a monopoly power in the desktop computers and also the web browsing operating system. The Justice Department in the US disliked the fact that Microsoft bundled a number of applications with the PC companies through use of contracts to regulate competition from other vendors that may want to sell packaged systems to the PC companies. This form of monopoly power enforced by Microsoft through use of contracts to prohibit the PC system from running other application by non-Microsoft vendors was reprimanded by the court system by ensuring that Microsoft issued a statement where its customized Windows system could be used by other non-Microsoft vendors to run their programs.
Purchasing packaged software versus customizing a system is a decision that most companies face due to the technological changes. Most companies prefer packaged system due to: cost saving, faster implementation of the new system into the business, and that the staff can work on applications that cannot work with the system purchased. Though there are major advantages for buying a system, there is a disadvantage in that the company has to rely on the knowledge of the vendor to make the system work with the business applications.
There are three major phases that the business should work on when in the process of purchasing software: Definition, construction, and implementation. If a package is being designed by the company, then it has to pass through these phases unlike if the system has been purchased. If a system has been purchased and requires modifications, it has to go through these phases unlike a system that can be installed and tested by the systems.
If no modifications are required, the vendor tests the system to make sure it’s integrated with the business operations and provides documentation on how to operate the system in case of a break down. If package is modified - vendor is responsible to furnish machine code for the application. If the purchaser modifies the system design then the package has to be tested. This means that the IS staff has to understand the process used to design the business package.
This process includes the modification of the system to the existing business systems in order to interface them with the new package. Implementation of the systems to business operations make IT important. This means that the IT department has to understand the codes of the new operating system. On the other hand, businesses prefer to outsource resources such that they pay an extra cost for the service provided through remote access via the internet. This form of open source package has been preferred by many companies because the business does not have to incur business cost in case of a system break down.
"Microsoft." ecis. N.p., n.d. Web. 2 June 2014. <http://www.ecis.eu/documents/Finalversion_Consumerchoicepaper.pdf>.
"Technology and Anti-Trust." YouTube. YouTube, n.d. Web. 2 June 2014. <http://www.youtube.com/watch?v=z3P5_zdkJkU>.