Microsoft vs. U.S.and the Downfalls to Economic Monopoly

Essay by FrogmenUniversity, Bachelor'sA, January 2008

download word file, 3 pages 4.3

In 1998, a case was filed by the United States Department of Justice (DOJ) and twenty US States against Microsoft. The case of U.S. vs. Microsoft the economics and policymakers find that the case was about the suitable position of competition policy through out the new global economy. The U.S. Department of Justice, Attorney General of the District of Columbia and 19 state attorneys general declared that Microsoft acted in a anticompetitive behavior designed to uphold its operating system monopoly to the loss of consumers. There are three specific actions that Microsoft has been charged with, monopolizing the computer operating system market, integrating the Internet Explorer web browser in attempt to eliminate Netscape as competition and using its market power to form anticompetitive contracts with producers of related goods (Gilbert & Katz, 2001).

The United States government has the Sherman Antitrust Act for a reason and it is to protect the rights of small business owners and the consumers.

The Sherman Antitrust Act was enacted in 1890 and outlawed all conspiracies that unreasonably restrain interstate and foreign trade, combinations and contracts. This included contracts among competitors to allocate customers, rig bids and fix prices. An illegal monopoly exists when only one company or business controls the market for a service or product and it has gained that market power, not because its service or product is better than others, but by holding back the competition with anticompetitive behavior. When there is a descending demand curve for an industry there must be the same demand curve for the company or business (Gilbert & Katz, 2001). This gives Microsoft the power to be a price creator in which they can set the price and sell whatever quantity of products or services to the consumers at the price they are willing to buy.