Economics - Microsoft Monopoly

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The Microsoft Empire In 1998 and The United States filed civil action law suits against Microsoft Corporation pursuant to the Sherman Antitrust Act of 1890 Sections 1 and 2. It was alleged that Microsoft was abusing it power and monopolizing the market by bundling its Intel based operating system and Internet Explorer web browser [ (Court, 1999) ]. These accusations further alleged that predatory pricing was driving other web browser competitors out of the market. Additionally Microsoft used their leverage to create economies of scale and business barriers of entry; essentially making themselves a single seller and a price maker [ (Antitrust and the internet:, 2007) ]. But was Microsoft intensions unethical and controlling? Or were they attempting to create a monopolistic competition for the industry? The definition of a monopoly is “a market structure in which there is only a single seller of a good, service, or resource. In antitrust law, a dominant firm that accounts for a very high percentage of total sales within a particular market” [ (McConnell, 2012) ]. And the main characteristics of pure monopoly are: being a single seller, not have a close product substitute, setting the price, block entry for competitors, and non-price competition [ (McConnell, 2012) ]. So when Microsoft created personal computer operating systems, such as DOS and Windows, and then identified the type of computer it will run on, Microsoft essentially built a monopolistic empire. Because their growth happened so rapidly it gave them a huge advantage in the new technology era market. And since they were the first company to make this technology it was difficult for others to compete and catch up due to technological and economic barriers [ (Antitrust and the internet:, 2007) ]. The creation of these barriers and since their computer and operating system became the most

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