violations. In October of this year, the government finally asked a judge to order Microsoft to stop requiring PC makers to include Internet Explorer when they install Windows 95 in their computers. Attorney General, Janet Reno, who referred to the company as a monopoly several times in her press conference, claimed that the company had violated the 1994 settlement, and that the Justice Department would seek a $1 million per day fine if they didn’t stop the practice. She said, This administration has taken great efforts to spur technological innovation, promote competition and make sure that the consumers have the ability to choose among competing products. This} action shows that we won’t tolerate any coercion by dominant companies in any way that distorts competition. (Labaton 2) The government’s petition seeks an order that would bar Microsoft from compelling PC manufacturers to accept their browser as a condition of receiving the OS, Windows 95. It also asks the court to order the company to notify Windows 95 users that they can use any compatible Internet Browser, as well as provide instructions on how to remove Internet Explorer from their computer. In response to the petition, Bill Gates, Microsoft’s chairman and chief executive, said that his company was not violating the antitrust agreement. He proclaimed his belief that his company had every right to improve and add to the basic features of the Windows OS. He went on to say that he hoped to further improve Windows by adding new capabilities, such as speech recognition and machine vision, to it. The Justice Department has several key issues that it has to deal with in its case against Microsoft. By deal with, I mean they have to get around Microsoft’s answers to their charges. First, the department is accusing the company of threatening computer makers who delete the Internet Explorer icon. The company answers this by claiming that “…computer manufacturers are free to ship any competitor product they wish, but they are not allowed to disable features of our products,” (Just Dept v MS 2). Second, the government is contending that the terms of Microsoft’s non-disclosure agreements are an obstacle in the way of their attempts to gather evidence for their investigation. Microsoft says that their non-disclosure agreements are no different than those of most companies within the software industry, as well as outside it. Finally, there is the matter of the competitive browser possibly representing a threat to Microsoft’s key product, its operating system. Company officials claim that by not allowing them to include their browser with Windows, the government is preventing innovation. They say that the pace of the competition will quickly pummel a company that stops innovating, and that the consumers win because competition drives firms to deliver better products at lower prices. In essence, Microsoft is claiming that by not allowing them to include the browser, the government is stifling the competition that it is trying to protect. Orin Hatch, chairman of the Senate Judiciary Committee, held the first of what he claimed would be several hearings on the Microsoft antitrust petition in the first week of November. At this hearing, the Senator produced an exclusivity agreement between Microsoft and Earthlink Network, Inc. It called for Earthlink to offer only Microsoft’s Internet Explorer and prohibits them from implying that another browser is available. “’What you have set forth appears to be a classic example of an artificial entry barrier. It is not designed to enhance the product. It is designed simply to hobble the competitor’ said Kevin Arquit (former general counsel of the Federal Trade Commission),” (Clausing…Senator). Since the hearing, Microsoft has asked a federal judge to throw the government’s petition out. They filed their response to the Justice Departments allegations with Judge Thomas Penfield Jackson (the same judge that signed the antitrust settlement two years earlier). The company is claiming that the government’s case is without base, is implausible and is a perversion of the truth. According to what their claims, the original decree allows them to develop integrated products. The response also claims that the company “…realized long before Netscape was even a company that Microsoft needed to build this type of functionality into Windows for consumers,” (Clausing…Microsoft 2). Netscape was founded in 1994. The first version of Internet Explorer wasn’t released until July of 95, and that was a limited beta version. Where does all of this leave us? Do any of these allegations have merit? Is this software giant a monopoly? If so, how are we going to be affected by it? At the time of this essay, no answers have been provided to the questions brought forth by the government’s allegations. However, it is my belief that Microsoft has met all the requirements necessary for the antitrust laws to be implemented. The consumers are in need of protection. This company has attained more than a dominant share of all sectors of the software markets. It has merged with many smaller companies; it has tied their products to one another, and is about as vertically integrated as one could imagine within the context of the software industry. This corporation seemingly goes out of its way to eliminate competition and block entry to the market. Consumers suffer because of this company and its practices, and I think it is high time that the government steps in and allows the antitrust laws to serve their purpose.
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