Microsoft Corp.s Pricing Policies Essay Example for Free

Microsoft Corp.s Pricing Policies EssayExecutive SummaryThis campaign study focused on the Microsoft smoke and charges made by their competitors, the Federal Trade management, and the subdivision of Justice of just violations and a monopoly of the computer in operation(p) systems and applications parcel, software development tools (e.g., programming language software), and hardware peripherals (e.g., Microsoft Mouse) that Microsoft specializes in. It focused on numerous issues that would lead superstar to believe that Microsoft was in fact monopolizing the inherent industry they were in. .In order to adequately discuss and dissect the issues of this case, I have broken this paper up into four pick out sections.Section 1 Key Terms Concepts Description of the key terms concepts that refer to this caseSection 2 The Case Against Microsoft Identify the facts and information that hold up my case against MicrosoftSection 3 The Defense of Microsoft Identify certain fa cts and information that support a defense of MicrosoftSection 4 Discussion What I have learned from the caseAfter reading this case study, I went back to the last-placemail that I received from you and went over the questions that you suggested we consider. The first of all question was If you were the DOJ how would you build a case against Microsoft or a dominant leader? I bequeath attempt to do this in Section 2 The Case Against Microsoft. The second question was If you were Microsoft how might you defend yourself against DOJ claims? I give cover this in Section 3 The Defense of Microsoft. I will attempt to show why it was very necessary for the DOJ to bring a case of monopoly and antitrust violations against Microsoft. In doing this, I will attempt to put myself into Microsofts shoes and defend their claims that they have non created a monopoly.Section 11. Key Terms ConceptsThe debate I decided to include these terms and concepts was to make it easier for me to write this paper and use certain terms without describing them each time I used them in my paper.Department of Justice, Antitrust Division The Assistant Attorney General for Antitrust, a presidential appointee, ran the Antitrust Division of the DoJ. When the Division mind the evidence was sufficiently persuasive, it brought crook charges. The Division in addition entered into negotiations with businesses to end litigation in exchange for consent decrees in civil cases, or nolo contendere (no contest) please in criminal casesDOJ Department of Justice The coupled States Department of Justice (DOJ) is a Cabinet department in the United States government designed to enforce the law and defend the interests of the United States according to the law and to ensure fair and impartial administration of justice for all Americans (http//en.wikipedia. Org /wiki / United_States_Department_of_Justice)DOS Disc Operating SystemFTC Federal Trade Commission The FTC enforces federal antitrust and consu mer protection laws by investigating complaints against individual companies initiated by consumers, businesses, congressional inquiries, or reports in the media(http//en.wikipedia.org/wiki/Federal_Trade_Commission)ISVs Independent Software VendorsMS-DOS Microsoft Operating SystemsNDAs Non-disclosure agreementsOEMs Original Equipment ManufacturersOS Operating SystemsPC Personal ComputerSherman Anti-Trust Act it made illegal any form of contract or combination between entities in regards to bargain and commerce that would have the pitch of restraining trade. And it also put responsibility on government attorneys and district courts to pursue and investigate trusts http//en.wikipedia.org/ wiki/ Sherman _ Antitrust_Act)The Clayton Act of 1914 The Clayton Act was designed to retard monopoly in the beginning rather than to remedy its effects. To accomplish this goal, Congress authorized antitrust prosecutions whenever business practices maysubstantially lessen competition or tend to create a monopoly in any line of commerce, in any section of the country.Section Two of the act forbade sellers from discriminating in price selling goods of like stigma and quality to different buyers at different prices when such differences were neither cost justified nor necessary to meet competition. Section Three limited the use of secure and exclusive traffic contracts. Tying contracts required purchasers or leases to acquire a second, separate product in order to obtain the desired product. Exclusive dealing contracts obliged a purchaser or lessee not to deal in products of competitorsVaporware is software or hardware which is announced by a developer well in advance of release, yet which then fails to emerge, either with or without a protracted development cycle. The term implies deception, or at least a negligent story of optimism that is, it implies that the announcer make outs that product development is in too early a stage to support responsible statements mor e or less its completion date, feature set, or even feasibility (http//en.wikipedia.org/wiki/Vaporware)Section 22. The Case Against MicrosoftIn order to make my case against Microsoft and prove that they are some assuredly in violation of monopoly and anti-trust regulations, I will answer the following questions1. Is this a case of monopoly?2. Is this case a violation of the Sherman Anti-Trust Act?Is this a case of monopoly?When I began considering my approach to this paper, I first imagination just about situations where I was absolutely sure I had been the victim of a monopoly. In order to do this, I first had to make sure that I fully understood exactly what a monopoly was. The American Heritage Dictionary defines a monopoly as Exclusive control by whizz group of the content of producing or selling a commodity or service. In simpler terms, I have unceasingly thought of a monopoly as a big weed doing its best to screw-over the little guy (A.K.A the customer) by doing its b est to make as much money as possible.The first situation that came to mind when I thought of a monopoly was how the Comcast cable company had a virtual strangle-hold on the cable service in my homes area. Since they had exclusive control of the room of producing or selling a commodity or service, in this case they were the only cable provider in our area, you were forced to settle for Comcasts service unless you had satellite television or you were will to settle for the wonderfully fuzzy reception from the antiquated rabbit ear antennas of years past.As a issue, we unfortunately had to deal with Comcasts horrible service and always rising rates. Luckily for us, another competitor came in to the picture when WOW (Wide Open West Internet-Cable-Phone) set up service in our area. We switched cable providers nigh immediately and we couldnt have been happier. They have provided excellent customer service and their rates are consistently lowerthan Comcasts. As a consumer, we definitel y benefited from the increased competition and eventual abolishment of the cable company monopoly in our area.With that out of the way, I was forced to look at whether or not Microsoft had a monopoly in their extra industry. Based on the information in this case, I cannot say that Microsoft has a monopoly on any single entire industry. Do they dominate the majority of endeavors that they assume to participate in? Of course they do. Just look at some of these numbersAs you can see from Table 1, Microsoft dominates the market shares of suite software in the United States. The only problem with these numbers is the fact that they are limited in their time range. In my experience, three years is a tenacious enough time to make an approximate forecast for future happenings, from a financial standpoint. However, that is from a transportation and supply-chain perspective where the main variable happens to be the customers merchant vessels fluctuations. In a volatile and constantly evol ving market such as software development, these numbers could sway tremendously with the introduction of a new and want after product or changes in consumer wants and desires.Table 2 shows the financial numbers of Microsoft and three of their competitorsThis also tells a lot about Microsofts market dominance, but this time from a financial standpoint. Two things that stand out to me in this table are the fact that Microsoft has almost twice as much net revenue than their nearest competitor (Microsoft has 4,649 and Novell has 1,998). The second thing that jumped out to me is the fact that all of the competitors show an increase in net revenue from 1984 to 1994. Based on the growth of Microsofts competitors (which there are more than one), I impression confident in saying that Microsoft does not have a monopoly in their industry. They do not meet the standard set forth by the simple definition in the dictionary of Exclusive control by one group of the means of producing or selling a commodity or service. As you can clearly see from the tables, Microsoftdoes not have exclusive control of the means of producing or selling a commodity or service.However, Microsoft does in fact hold a monopoly on many other counts, one of which is that Microsoft Windows, the Microsoft OS, is installed on most ad hominem computers that can be purchased from Dell, Hewlett Packard, Compaq, and the like. Because this OS comes pre-installed, we as the consumers do not have much of a choice and there is not much of an alternative for us to go with unless we want to switch to an Apple Macintosh OS. Although Microsoft isnt a natural monopoly in the classically defined or economic sense that Ive place above, it is a natural monopoly in the land of cyberspace. Microsoft is the path of least resistance for government, consumers, and programmers alike. Microsoft may have many faults, but they make a lot of things easier too.Most of us are willing to accept a monopoly such as Microsoft has f or increased convenience and usability. Microsoft is a one-product company, no matter how it may sometimes appear. Their success is essentially due to the success of Windows. It rose to power with one product, and it resides there because of the success of that product. Unfortunately for us, this is not only the best product on the market, it is the only legitimate alternative for us to use. In my book, regardless of the textbook definition, this constitutes a monopoly by Microsoft.Is this a case a violation of the Sherman Anti-Trust Act?As I utter in Section 1, the Sherman Anti-Trust Act makes illegal any form of contract or combination between entities in regards to trade and commerce that would have the effect of restraining trade. Based on this case and the readings from week 7, there is proof that Microsoft did attaint the Sherman Anti-Trust Act, particularly Sections 1 and 2 of the Act. Section One prohibited contracts, combinations and conspiracies in ascendence of trade while Section Two outlawed monopolies and attempts to monopolize.Microsoft violated the Sherman Anti-Trust Act by illegally using its market power to restrain trade in the high tech industry.A filing from the DOJ on December 19, 1999 stated that Microsoft engaged in illegal conduct in five separate ways* by tying browser sales to sales of the operating system* by using its market power to illegally maintain a monopoly* by attempting to monopolize the browser market* by imposing exclusive dealing arrangements between itself and Internet service providers and/or developers and* by imposing first boot-up and screen restrictions on computer makers.http//news.com.com/2100-1001-233992.htmlThe DOJ filing in December of 1999 shows exactly why Microsoft was in violation of the Sherman Anti-Trust Act. Some of the things that Microsoft has done that clearly violate the act include, but are certainly not limited toMicrosoft customers upgrading their copies of Microsoft Office at the Microsoft website, but using the competitions web browser, are greeted with a message insisting on the use of MSIE for the full edition of the update.On November 18, 1998 the digital greeting card company Blue nap Arts discovered that beta versions of Microsofts picket Express (which comes free with Internet Explorer) were automatically filing Blue Mountains e-mail greeting cards into the junk folder rather than the inbox. Shortly afterwards, Blue Mountain Arts discovered that Microsofts WebTV service was blocking their e-mail greeting cards as well.When the courts ordered Microsoft to ship Windows without an integrated Internet Explorer, the company complied by offer a non-functional version of the OS, claiming that the browser was now so completelyintegrated into Windows to remove it was tantamount to breaking the operating system.-All three of these examples were buzz offn from the following website http//www.vcnet. com /bms/departments/dirtytricks.shtmlTo summarize, Ive identified th e following factsMicrosoft does have a monopoly in their industryMicrosoft did violate Acts 1 and 2 of the Sherman Anti-trust ActIt is convenient for Microsoft to say that their success is solely based on them being able to produce good products. Although they do devote extraordinary resources to improving their technologies, they also work diligently to stifle growth and in-roads from their competition.Section 33. The Defense of Microsoft I am not going to spend a great deal of time attempting to defend Microsoft. They have spent millions and millions of dollars working tirelessly to do it themselves. Furthermore, I firmly believe that they have established a monopoly and that this monopoly serves to futher one parties interests Microsofts. However, I did some research online and came up with the following paragraph from an denomination titled The Microsoft Antitrust Suit written by Peter Tracey.In it, he wrote The persecution of Microsoft is an assault on the free market, and on the intelligence of the American people. It is the result of long-held envy by Microsofts competitors, including Netscape and Oracle. It is in violation of the constitution, being both ex post facto and vague (Getman). The governments persecution of Microsoft should be stopped, moreover, the antitrust legislation that has exposed business to dirty and unreasonable practices should be repealed. (http//www.levelthreesolutions.com/ peter/msantitrust.html)In Microsofts opinion, the government should not get involved in determining what means a company uses to produce their products. They feel that they have been able to succeed through hard work, tenancity, and superior products. Although it may be unfortunate for their competitiors, Microsoft feels that if you cant stand the heat, stay out of the kitchen. In essence, Microsoft makes the most money doing what they do by taking solid ideas from other people, such as the Disc Operating System, and making them better. Microsoft doesnt mo nopolize the industry. They simply work harder, take risks, and capitalize where other companies have floundered.Section 44. Discussion Before I discuss this particular case study, I must tell you that I have always been a big fan of Microsoft and Bill Gates. I have enjoyed the relatively cheap cost of Microsofts software such as Microsoft surmount and Word. I have also felt that with each successive upgrade of these products I have only been able to improve my performance both at work and school. I also thought it was impressive that Bill Gates could take his ideas, push forward with his undefeatable will, and become one of the richest people in the entire world. However, this case study and the analysis that Ive done with it has really opened my eyes to the seamy side of Microsoft and Bill Gates.I was so moved by this case that I even went and downloaded one of Microsofts few internet browser competitors, Netscape, to compare its product with Internet Explorer. When my wife asked me what my paper was I about I told her it was about Microsoft and whether or not they were a monopoly in the industry. Her very quick and wry response said it so perfectly Duh, of course they are. Even I know that. I think this says it all so succinctly. Do I think Microsoft needs to be disbanded or separated in to two different operating companies? Not really.Like I said before, I enjoy Microsofts products and I use them constantly. In fact, I am writingthis paper using one of Microsofts products, Microsoft Word. I just honestly think that fair competition and a level playing field for Microsofts competitors would only benefit the consumer in the long run. more(prenominal) people with new insights will be given the chance to expand the technology already in place. Too many companies are skittish about taking on Microsoft because of the monopoly and the fear of being annihilated.Finally, I have learned that cases of anti-trust and monopoly are not always as clear cut as one may th ink. I always thought that Microsoft had a clear monopoly and that there was nothing any of us could ever do to remedy it. I also really didnt care as long as they continued to improve Windows and the accompanying Office Suite. I can see now that competition in all economic arenas, whether it is cable television or fast-food or computer software, is important, no vital, for lower prices and increased technological growth.