Download Microsoft Lawsuits: Monopoly BUS 650: Managerial Finance

Microsoft Lawsuits: Monopoly
BUS 650: Managerial Finance
Microsoft’s Lawsuit
After watching the video as assigned by the instructor, we know that there are
four different types of markets perfect competition, monopolistic competition, oligopoly,
and monopoly. Each one of those markets existed or exists in some parts of the country.
The four types of markets are established to sell goods to consumers even though some of
the markets are not used anymore. To better understand each of the markets, we have to
look at their definitions.
Perfect competition is defined as all firms selling an identical product, all firms
are price takers, all firms have a relatively small market share, buyers know the nature of
the product being sold and the prices charged by each firm and the industry is
characterized by freedom of entry and exit (Byrd, 2013). An example in where perfect
competition would be used is in the agriculture business; farm markets.
Monopolistic competition is defined as all firms produce similar yet not perfectly
substitutable products, all firms are able to enter the industry if the profits are attractive,
all firms are profit maximizers and all firms have some market power, which means none
are price takers. Monopolistic competition differs from perfect competition in that
production does not take place at the lowest possible cost (Byrd, 2013). Because of this,
firms are left with excess production capacity.
Oligopoly is defined as a situation in which a particular market is controlled by a
small group of firms. An oligopoly is much like a monopoly, in which only one company
exerts control over most of a market. In an oligopoly, there are at least two firms
controlling the market. The retail gas market is a good example of an oligopoly because
a small number of firms control a large majority of the market.
Monopoly is defined, as a situation in which a single company or group owns all
or nearly all of the market for a given type of product or service. Monopoly is
characterized by an absence of competition, which often results in high prices and
inferior products. A monopoly is a market containing a single firm. In such instances
where a single firm holds monopoly power, the company will typically be forced to
divest its assets (Byrd, 2013). Antimonopoly regulation protects free markets from being
dominated by a single entity.
In the article, One Monopoly Is Better Than Two: Antitrust Policy and Microsoft,
Microsoft is accused of attempting to establish a monopoly and control the internet as
well. The suit was described how Microsoft abused monopoly power on Intel-based
personal computers in its handling of operating system sales and web browser sales. The
issue central to the case was whether Microsoft was allowed to bundle its flagship
Internet Explorer web browser software with its Microsoft Windows operating system.
Bundling them together is alleged to have been responsible for Microsoft's victory in the
browser warsas every Windows user had a copy of InternetExplorer (By, 1999). It was
further alleged that this restricted the market for competing web browsers, Netscape
Navigatoror Opera, that were slow to download over a modem or had to be purchased at
a store. Underlying these disputes were questions over whether Microsoft altered or
manipulated its application programming interfaces to favor Internet Explorer over third
party web browsers, Microsoft's conduct in forming restrictive licensing agreements with
original equipment manufacturers, and Microsoft's intent in its course of conduct.
Microsoft stated that the merging of Microsoft Windows and Internet Explorer
was the result of innovation and competition, that the two were now the same product and
were inextricably linked together and that consumers were now getting all the benefits of
IE for free. Those who opposed Microsoft's position countered that the browser was still
a distinct and separate product, which did not need to be tied to the operating system,
since a separate version of Internet Explorer was available for Mac OS (Rowley, 2002).
They also asserted that IE was not really free because its development and marketing
costs may have kept the price of Windows higher than it might otherwise have been.
Microsoft is the perfect definition of what a monopoly is. Only Microsoft has
been able to grow and succeed in today’s world of technology. Microsoft continues to
improve its software and better its software every few years. It is important to know
what entails in a monopoly. In order to consider Microsoft as a monopoly, it has to be
the only seller; Microsoft fits this description because they continue to be their own
competition by consistently improving. This is having an effect on others in the financial
world because they cannot hold a competition with Microsoft. Monopoly seems to have
a negative effect on other companies because they have no other sellers, they have to go
to Microsoft because that’s the only one. Another problem managers have with that is
the set price when it comes to monopoly. Because there is only one seller, the price is set
and there is no room for negotiations because there is no other competition. This tends to
really be a problem with different technologies, example MAC.
By, R. H. (1999, Nov 08). Manager's journal -- U.S. v. microsoft: Judge jackson's
findings of fact --- A predatory monopoly.Wall Street Journal. Retrieved from
http://search.proquest.com/docview/398710830?accountid=32521
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance. San Diego, CA:
Bridgepoint Education Inc.
Rowley, J. (2002, May 16). Microsoft praises windows dominance ; legal case argues
'monopoly is good for you,' analyst says. Toronto Star. Retrieved from
http://search.proquest.com/docview/438444130?accountid=32