1. Why was/were the firm(s) investigated for antitrust behavior?
The Justice Department and the states believe that Microsoft has used its monopoly in operating system software to protect its dominance and eliminate competitors. The government says that in the long run, consumers will be harmed, because there will be less competition and fewer choices.
More specifically, the government contends that Microsoft has engaged in actions to preserve its Windows monopoly that violate antitrust laws. The government also maintains that the company has used the power of its Windows monopoly to attempt to monopolize the market for Internet browsing software. In addition, government lawyers allege ...view middle of the document...
Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft's conduct in forming restrictive licensing agreements with original equipment manufacturers (OEMs), and Microsoft's intent in its course of conduct.
The Microsoft Corporation violated the nation's antitrust laws through predatory and anticompetitive behavior and kept ''an oppressive thumb on the scale of competitive fortune,'' a federal judge ruled today.
Microsoft had hurt consumers by stifling competition in the software marketplace, particularly at the expense of the Netscape browser.
2. Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
Pecuniary – consisting of money
Non-pecuniary-not consisting of money
Negative publicity hurts, and could erode sales or make it harder for the company to do business deals with partners. Some industry analysts also fear that Microsoft management could get so distracted by the lawsuit that they might make poor business decisions.
3. Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.
No. Monopolies and oligopolies are not always bad for society. Monopolies and oligopolies are consistent and efficient in production of goods and services to customers. Take for example WalMart—WalMart has created issues with regard to causing stores within the same shared area to go out of business, or force them to reduce costs of goods and services to be able to compete, but doing so at a lost to their business. However, on the customer end of the equation, WalMart gives consistent low costs, and because of their hyper-efficient supply chain, the goods are always in supply.
4. Provide at least one example of a...