FREE ESSAY ON MICROSOFT ANTITRUST

MICROSOFT ANTITRUST

Is Microsoft a fetching business model to be emulated or the most destructive force in the
software industry? Should the government apply the antitrust laws to the software
industry or sit back and wait for dynamic market forces to solve anti-competitive
problems? 
Discussions about Microsoft represent a larger-than-life dispute that speaks not only to
the computer giant's impressive efforts to monopolize key elements of the software and
electronic commerce markets, but to the larger issues of a high-tech society. Many
partisans in debates over Microsoft are speaking to the broader issues and defending
ideological views that will be tested as the debate over Microsoft's anti-competitive
practices plays out. 
From my view point, there are some aspects of the dispute that seem clear and others that
are anything but clear. 
First, it is clear that Microsoft has achieved its current market dominance through a
combination of factors that include hard work, good luck, popular products, and an
impressive array of anti-competitive or simply ruthless business tactics. It is equally
apparent that some sectors of the computer industry undoubtedly benefit from this
dominance -- not everyone sells products or services that directly compete against
Microsoft in strategic markets, and the existence of a private monopoly for the desktop
operating system (OS) simplifies life for some developers. And in the increasingly broad
areas where Microsoft has targeted a sector for dominance, the results have been a
demoralized software industry, a paucity of venture capital and stifled innovation. 
What is less than clear is what the government or the public should or can do about
Microsoft's often brutal efforts to monopolize software markets. 
The Justice Department is now focusing on important but relatively narrow issues
concerning Microsoft's 1995 antitrust consent agreement, whereby Microsoft agreed not to
license Windows 95 on a per-machine basis (forcing computer manufactures to pay twice if
they installed competitors' OS) and not to tie the purchase of the OS to the purchase of
other Microsoft products. Justice is focusing on contractual agreements between Microsoft
and computer manufacturers that require firms that distribute Windows 95 also to
distribute Internet Explorer, a product Microsoft wants to replace Netscape as the
most-used Internet browser. 
Microsoft's principle defense against the suit is to argue that Internet Explorer 4.0, a
program that takes as much as 66 megabytes on a hard disk, is not an application at all
but simply a part of the OS. Because more than 90% of PCs worldwide ship with Microsoft's
OS, the issue of what constitutes the OS is an important dispute, given the Microsoft
agreement regarding product tie-ins.