Case History On Microsoft

CASE HISTORY

Microsoft, founded by Bill Gates, is one of the most influential software companies of the twentieth century. It was founded in an attempt to fill a niche in the personal computer operating system and software business. Like any other company Microsoft wanted profits and in order to do so, a large market share. Microsoft more than succeeded, it experienced phenomenal growth and soon had a market share of over 90% in the Intel-compatible PC operating systems. In that time there were no substitutes and the threat of substitutes were minimal as there were substantial costs involved in entering the market.

Government's interest in Microsoft's affairs had begun in 1991 with an inquiry by the Federal Trade Commission (FTC) over whether Microsoft was abusing its monopoly on the PC operating system market. The commission held a vote and a 2-2 deadlock was declared eventually closing the investigation in 1993. That however was not the end. On November 5, 1999 Thomas P. Jackson released his findings declaring that Microsoft held a monopoly in the PC industry and several months later ordered a break up of Microsoft.

Microsoft allegedly abused monopoly power in its handling of operating system sales and web browser sales. The main issue in question was whether Microsoft was allowed to bundle its Web browser Internet Explorer (IE) with its Microsoft Windows operating system largely competing with Netscape Navigator which was market leader at that time. Microsoft made it compulsory that PC makers accept IE in order to accept Windows, in this way consumers had to be exposed to IE on purchasing a PC with the Windows operating system. From Microsoft's perspective, it was just another option for consumers, merely an added Ð''feature.' To competitors however (Netscape Navigators) this was an unfair practice as this new IE directly competed with their web browser and to them was seen as an entirely new Ð''product.' Microsoft argued that Netscape Navigator was still available through Windows operating systems but to include it in their package was something they weren't willing to do, it was, as they put it "forcing McDonald's to sell Burger King."

Microsoft then attempted to make a deal with Netscape by trying to persuade them to structure its business so that the company would not distribute platform level browsing software for Windows thus limiting Netscape's development. If they did do so however, using different technologies,

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