Microsoft vs. DOJ :: GCSE Business Marketing Coursework

Microsoft vs. DOJ Arguments of the DoJ (the white paper) 1. Microsoft and it ´s Monopoly Power MS monopoly power is in personal computer operating systems. A PC operating system as you all know controls the interaction of the different parts of the computer. It creates files, organizes the computer ´s memory and creates a platform for applications. The operating system is indispensible to the computer for this reason. Maybe that changes as technology evolves but right now a computer without an OS is nothing but a box of inert hardware. MS today ships 97% of PC OS that are installed by computer manufacturers. Case law defines monopoly as beginning at about a 70% share of the market. But this alone isn ´t illegal in respect to superior products, service or mere luck. Nor does market share alone necessarily imply monopoly power. For example a manufacturer might make 100% of knickers on the market. But if there are other pants manufacturers who are able to turn their production into knickers, the one and only knickers producer wouldn ´t be able to charge more than a competitive price or exclude rivals from his market. Speaking of this little example it ´s now clear what monopoly power means: it is the power to control prices and exclude competition. MS has and still exercises, both form of monopoly power. It charges above competitive prices and use tactics that eliminate rivals. And not because MS are superior to others and more beneficial to the consumers. No, not at all, MS uses predatory tactics whose sole purpose is to destroy it ´s rivals. MS often has denied that it posesses monopoly power but their arguments are quite feeble. A MS spokesman stated that the market is highly dynamic and that there are only low barriers to enter the market, especially for fringe firms. But this is untrue for the means of competition. There might be a lot of new technology but the barriers MS deliberately put up made it impossible for new market entry. The result is that MS can charge higher than competitive prices without a loss of market share. Another argument of MS is that it ´s monopoly power is defeated by ist need to compete against it ´s own installed base meaning that MS has eg now to compete against win 95. But this is another partly untrue argument because most consumers think of a new OS only when they want to buy a new computer and replace their old one.