Sherman Antitrust Case

Sherman Antitrust Case: Microsoft

The Sherman Antitrust Act was designed to protect the market from anticompetitive practices. From 1994-2002, Microsoft was engaged in a series of charges and court hearings regarding allegations of violating federal antitrust laws. The charges alleged that Microsoft’s bundling of products excluded competitors and also helped Microsoft gain an unfair price advantage over competitors. The purpose of this essay is to discuss the Sherman Antitrust Law and whether charges alleging Microsoft was in violation of antitrust laws were valid or outdated.

Sherman Antitrust Law

Sherman Antitrust Law was designed in 1890 to help keep fair market practices by outlawing business practices that exclude competition and create unfair competitive advantages. “According to Baxter (1980), the Sherman Antitrust Act was designed to protect smaller businesses from larger more efficient enterprises” (William, 1999). Microsoft’s antitrust charges regarded Section two of the Sherman Antitrust Act which prohibits monopolies from engaging in business practices that exclude competitors and create a detrimental market environment for consumers and competitors.

Microsoft’s Antitrust Allegations

Microsoft’s charges alleged Microsoft violated Section two of the Sherman Antitrust Act. Microsoft’s antitrust problems began in 1990 when the FTC began investigating Microsoft. The investigation led to charges on July 15, 1994 when “the U.S. Department of Justice brought a complaint alleging that Microsoft used exclusionary and anticompetitive contracts with personal computer manufacturers unlawfully to maintain its monopoly of personal computer operating systems (Gilbert, Richard; & Katz, Michael, 2001).” Bundling the products not only created a significant price advantage for Microsoft, but also controlled the competitive field.

The Court’s Decision

The Antitrust case against Microsoft was based on Microsoft’s monopoly power against its...