Economics

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The Microsoft Case |

Microsoft Monopoly |

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Microsoft Monopoly--Why was Microsoft investigated for antitrust behavior? Do you agree or disagree that Microsoft was trying to gain monopoly power in the computer software industry? Are monopolies always bad? Give at least one example of a case where having a monopoly may actually be a good thing. |

Microsoft is a largely diversified computer software manufacturer with one of the highest valuations in the world. Reports of antitrust from abusing their leading position of computer operating systems came forth in 1998. Lawmakers investigated to find Microsoft was trying to create a monopoly in the industry.

Almost all of Microsoft products are complementary to a member of the Windows family of operating systems for personal computers and servers. Microsoft Office products only work in Windows operating system, with Microsoft; you are provided free Internet Explorer when other programs such as AOL were paid services. This act was though of as “exclusive dealing” and prevented competition in the market.

Monopolies can affect both the market and the providers. It can cause simulated pricing, a demand for products that are always in short supply and have multiple complaints with little to no response, and often times, consumers are not able to change to other products or services. Having such control over a large market really puts the consumer on a crutch.

There are three ways that consumers could suffer from anti-competitive actions. First, consumers are affected by these actions that increase prices. Second, consumers may be stuck because these actions can limit their choice of variety and quality (Such as the pricing schedule that costs more for Microsoft products if user was on a system other than Windows). Third, these actions may limit innovative activity hurting future consumers. It is customary in antitrust cases to value the benefits to consumers and balance them with the burden of...