Global Ethics Case Study Microsoft

Document Sample
Global Ethics Case Study Microsoft Powered By Docstoc
					December 3, 2007

Alice M. Foster

Ethics in a Global Marketplace

Week 5 Case Study

                       Microsoft Corporation As The Best Seller of

                       Software and Antitrust Regulation In The US

                                   Case Study Summary

This case is about Microsoft Corporation being accused of violating the Sherman Anti-

Trust Act. According to the case study, Microsoft wanted to control the internet explorer

on the web by pre-loading their own explorer programs into their operating system.

Microsoft is the biggest operating system available on the market. By including their

pre-loaded explorer software and not allowing for advertising of other software which

was available, Microsoft was accused of having a monopoly.

According to the case study, “The Sherman Act was designed to be a comprehensive

charter of economic liberty aimed at preserving free and unfettered competition as the

rule of trade. It rests on the premise that the unrestrained interaction of competition

forces will yield the best allocation of our economic resources, the lowest prices, the

highest quality, and the greatest material progress, while at the same time proving an

environment conductive to the preservation of our democratic political and social

institutions. But even were that premise open to question, the policy unequivocally laid

down by the Act is competition” (Parhizgar & Parhizgar, 2006, p 468).
The case study states that the Antitrust Division of the Department of Justice became

aware of Microsoft’s dominance and sued the company for antitrust violations. But the

case study does not identify who was the complainant. If the Department of Justice is to

service the citizens of the United States, then their customers are the end-users and

consumers. I found throughout the case study that the complaints were brought about by

competitors, but did not find any information which leads me to believe that there wasn’t

any harm to consumers. Eventually the Justice Department charged Microsoft with

engaging in anti-competitive and exclusionary practices.

                                  Case Study Questions

What is the content of the Sherman Act?

“Congress passed the Sherman Antitrust Act in 1890. The purpose of the act was to

preserve the economic ideal of a pure-competition economy. To reach this ideal, the

Sherman Act prohibits combinations that restrain trade, and it prohibits attempts to

monopolize any area of commerce. Violations of the act can result in fines,

imprisonment, injunctive relief, and civil damages.” (Davidson, Knowles & Forsythe,

2004, p. 900)

How do you define monopoly in the computing industry?

Monopoly is defined as “the power of a firm to carry on a business or a trade to the

exclusion of all competitors” (Davidson, Knowles & Forsythe, 2004, Legal Dictionary p.

Do you believe Microsoft has a monopoly?

I do not believe that Microsoft has a monopoly just because it packages its software and

its own brand of internet explorer with its operating system. This is commerce and

capitalism, Bill Gates brought this company from nothing to the most widely used

computer name in the world. There are avenues available for other businesses to partner

with Microsoft and become part of the bundled package. I believe that if Microsoft were

restricting and placing bugs into their system where other software programs were not

able to operate with the Windows system, then this would be considered a monopoly.

Should Microsoft be split into two companies? If yes explain advantages.

I do not believe that it is necessary for Microsoft to be split into two companies, the only

reason this would happen is to split the operating system company from the internet

explorer company. I am not sure what the point would be, IBM is allowed to have the

largest printing business in the world and their printer cartridges only work on their

system, they service their own products, they have their own operating systems which

can interface with IBM products.

Do you think Microsoft used its econo-political power to influence the outcome of the


I am not sure that Microsoft had to use any power to influence the outcome of the

lawsuit; the name alone is enough to inspire a sense of loyalty. In addition, there may

have been a sense that Microsoft was being targeted because of its greatness.
Do you believe Microsoft used its technological power in the marketplace to prevent

potential competitors from challenging its dominant market position in operating


Absolutely, they were able to provide a better product, better service and more options.

There were able to provide the greatest number of products and reach the most


Do you believe the Department of Justice and the U.S. Court System were not severing

enough customers in their final settlement agreements?

I think that they were serving all of the businesses who were complaining about how

unfair an advantage Microsoft had because they packaged their systems with their own

programs. If the Department of Justice and the U.S. Court System were serving their

customers, which should be the public, then they did enough by forcing Microsoft to

remove some barriers.


Davidson, D.V., Knowles, B.E., Forsythe, L.M., (2004) Business Law Principles and

       Cases in the Legal Environment, Thomson South-Western West, Mason, Ohio

Parhizgar, K.D., Parhizgar, R., (2006) Multicultural Business Ethics and Global

       Managerial Moral Reasoning, University Press of America: Lanham, Maryland

Shared By: