Any similarities with Intel's practices and Microsoft's?
mercurycenter.com
Microsoft appears to have violated antitrust law in at least four key areas.
The most important is a concept known as foreclosure of distribution, which says that a monopolist cannot close off the channels that a competitor needs to use to sell its own products.
Jackson found that Microsoft blocked the most efficient means for Netscape Communications Corp. to distribute its Navigator Web browser. Microsoft signed contracts with computer makers and Internet service providers prohibiting them from distributing the Netscape product.
Microsoft attacked Netscape, Jackson said, because Microsoft feared that widespread use of the Netscape browser, which ran on any operating system, would eventually reduce the need for consumers to buy Windows.
Another part of the antitrust law, called tying, prevents a monopolist from forcing consumers to accept one product in order to obtain another product.
Jackson found that Microsoft engineered its latest operating system, Windows 98, in such a way that the company's Web browser, Internet Explorer, cannot be removed.
Microsoft attempted to defend itself from this charge by arguing that Internet Explorer had been ``integrated' into the operating system. However, Jackson declared that Web browsers and operating systems are separate products and it was unnecessary to combine them.
By giving away its Web browser for free, Microsoft may also have been guilty of predatory pricing, another tenet of antitrust law.
Jackson found that Microsoft spent $100 million a year developing the browser and about $30 million a year marketing it. Yet the company gave the product away as a further attack on Netscape, which was eventually forced to give away its own product and thus forgo a substantial revenue stream. ``This investment was only profitable to the extent that it protected the applications barrier to entry,' said Jackson.
Jackson might also find that Microsoft violated the legal ban against competitors getting together to fix prices or otherwise collude on marketing.
In his opinion, Jackson indicated that he believed Netscape's account of a June 1995 meeting between officials of Microsoft and Netscape. During that meeting, Netscape alleges, Microsoft executives offered to divide the market for Web browsers, with Microsoft making browsers for Windows and Netscape making them for other operating systems, such as Unix. Netscape says it rejected the offer, and Microsoft says the offer was never made.
Overall, Jackson's findings indicated that the government met all the applicable tests under antitrust law to prove monopoly power.
He found the company's market share is ``dominant, persistent, and increasing.' He said an alternative to Microsoft cannot arise because there aren't many programs that run on another operating system and more applications aren't written because few would be sold, creating a vicious cycle that locks competitors out.
Jackson also ruled that there are no viable alternatives, or ``substitutes,' for Microsoft's operating system, and there no real restraints on the price Microsoft charges for its operating systems.
The judge declared that Microsoft committed a litany of anti-competitive acts designed to hurt other companies, protect its monopoly power, stifle innovation, limit competition, and harm consumers.
If Jackson does find that Microsoft broke the law, it's unclear what the remedy would be. Given the judge's long list of findings against the company, he may be prepared to entertain a drastic solution, such as breaking the company into parts.
Jackson would prefer to a negotiated settlement, and while Microsoft officials have been talking about settlement nonstop since the findings were issued, most observers do not expect the company to make a serious offer that would be acceptable to the Justice Department at this point.
``I expect Microsoft will go through the motions,' said Litan. ``But I don't think there will be a settlement.' |
