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