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Trust
A trust is any large industrial or commercial corporation or combination having a monopolistic or semi-monopolistic control over production of some commodity or service (Websters) So antitrust means against or opposing a trust Antitrust law protects competition, not necessarily competitors
for the benefit of the consumers (long run)
Sherman
if we will not endure a king as a political power, we should not endure a king over production, transportation and sale of any of the necessaries of life
Two Criteria
Monopoly power
having substantial market share (over the long run), i.e. enough power to control the market
Microsoft
Chairman, Bill Gates President and CEO, Steven Ballmer Lawyer, William Newkom
Questions
1. Does Microsoft have monopoly power? 2. Has it engaged in predatory or exclusionary practices?
Findings of Fact
The judge has ruled the pertinent market to be that of Intel-Compatible PCs
so non-Intel compatible PC operating systems (e.g. Mac) are not seen officially as competitors likewise for non-PC operating systems (e.g. Unix)
in the market so defined, Microsoft has monopoly power and is likely to maintain it for some time to come (why?)
Platform
Recall that the software between the user and the hardware is multi-layered The operating system provides a platform, the so-called application programming interfaces (APIs) upon which applications interact with the hardware This platform allows Independent Software Vendors (ISVs) to focus on application software and not hardware idiosyncrasies
Remember
Establishing monopoly power is not enough Did Microsoft engage in predatory practices to maintain or extend its monopoly? The current allegations focus on Microsofts inclusion of its browser Internet Explorer (IE) along with its operating system Windows
Is a browser an application?
Recall a browser is software used to gain access to and view files on the World Wide Web Part of the operating systems job is to manage files; these days those files may be on the web, so maybe the browser is part of a modern operating system But the browser is used directly by the user, so maybe its an application
Microsofts side
The inclusion of IE is a matter of integration and innovation; it is:
what the user wants what the ISV wants consistent with past business practices (Office is the integration of word processing, spread sheets, and so on)
Three stages
1. Finding of fact
November 1999
3. Remedy (judgment)
June 2000
Judge quotes:
Microsoft possesses a dominant, persistent and increasing share of the worldwide market for Intel-compatible operating systems Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition.
Klein quote:
"We are very pleased with the Court's ruling. The Court concluded that Microsoft violated the antitrust laws by abusing its monopoly power and attempting to monopolize the internet browser market. The decision will benefit consumers and stimulate competition and innovation in the high-tech industry."
Balmer quote:
We spent the past 25 years thinking of ourselves as a small, aggressive company playing catch-up to industry giants, even though at some point along the way we became a large company. values we hold dear opportunity for everyone, integrity, innovation, customer focus and partnership have been called into question today.
The big wigs cannot own a substantial stock in both (who will be the standard bearer?)
More to follow
Directly to the Supreme Court?
NO
Technology Tutorial
To speed things up, the Appeals judges were going to have a technology review But even basic questions like what is a browser? and what is an operating system? are controversial in this case And neither side wanted their point of view compromised by the review
Whats to come?
Oral arguments in the Court of Appeals are scheduled for Feb. 26 and 27 After that:
Supreme Court? European Union? Individual and/or class action suits?
References
http://www.microsoft.com/presspass/doj/rickrulewp.htm http://www.usdoj.gov/atr/cases/f3800/msjudgex.htm http://www.microsoft.com/presspass/trial/apr00/0403conference.asp http://www.usdoj.gov/atr/public/press_releases/2000/44 64.htm http://www.cadc.uscourts.gov/ECF/Microsoft/microsoft. asp Newsweek, Nov. 15, 1999. The Wall Street Journal, Nov. 8, 1999. The Wall Street Journal, Apr. 5, 2000. The Washington Post, Oct. 27, 2000.