The Microsoft Case: Protecting Competition or Competitors? :: Business Management Economics

The Microsoft Case: Protecting Competition or Competitors? "When a company of merchants undertake, at their own risk and expense, to establish a new trade with some remote and barbarous nation, it may not be unreasonable to incorporate them into a joint stock company, and to grant them, in case of their success, a monopoly of the trade for a certain number of years. It is the easiest and most natural way in which the state can recompense them for hazarding a dangerous and expensive experiment, of which the public is afterwards to reap the benefit. A temporary monopoly of this kind may be vindicated upon the same principles upon which a like monopoly of a new machine is granted to its inventor, and that a new book to its author." -Adam Smith, Wealth of Nations, 1776 Introduction Protecting the competition, not the competitor, has become a commonly used statement in recent interpretations of the Sherman antitrust acts of the late 19th century. Such words, however, were not used in the preliminary decision of the U.S. v. Microsoft monopoly case. Just recently, U.S. District Judge Thomas Penfield Jackson cast Microsoft as a "voracious monopolist that has hindered innovation, harmed consumers, and run roughshod over its rivals." (Chandrasekaran, 1999: 1) A 207-page "findings of fact" report did not conclude whether Microsoft violates the Sherman Antitrust Act. The report suggests, however, that Microsoft is indeed a software hog with a decade of at least 90%-95% control of the Windows market share. Chief Executive Officer Bill Gates said he respectfully disagrees with a number of the court’s findings. "In the end we’re quite confident that our integrity†¦and the benefits we provide consumers will be upheld." (Chandrasekaran, 1999: 1). It seems that in an effort to protect the consumer, the government may have forgotten the power of the consumer’s dollar. Perhaps Microsoft has control of the market share because the product is superior to all others, and consumers know it. Is it possible that the government would be punishing the consumer, if in fact consumers truly are happy with the Microsoft product, and have chosen to buy it, not because Microsoft has a significant influence on the market, but because the product is more advanced? What makes a product superior to another? Vision, innovation, risk, marketing: the same elements that Adam Smith praises in a new venture, then rewards, if successful, by granting the company a temporary monopoly in the market.