Antitrust Law: The Microsoft Company Probe Antitrust Essay

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Antitrust Law: The Microsoft Company Probe

Antitrust law umbrellas all pieces of federal and state legislation that are aimed at regulating commerce and trade by preventing price fixing and unlawful restraints, and controlling monopolies so as to maximize consumer welfare by promoting competition, encouraging quality production and ensuring reasonable prices (Farlex, 2014). Monopolies and oligopolies are the two forms of market structures covered under antitrust law. Such could be natural monopolies, government monopolies, or monopolies resulting from collusion. One significant feature of these is that a handful of firms (one firm in the case of monopoly) control the entire market, and therefore enjoy significant market power. Owing to this, such firms often charge a price higher than would be the case in a competitive structure (monopoly price), and produce less-than-optimal output levels. The resultant productive and allocative inefficiencies, as signified by the monopoly dead weight loss and high prices provide the framework for government regulation through antitrust law (Shughart II, 1995).

Microsoft and the Antitrust Law

The Microsoft Corporation was sued in 1998, in the famous U.S. Vs. Microsoft case, for antitrust law violation. The corporation was accused of using illegal predatory arrangements to stifle competition, particularly Netscape browser, within the operating system market.

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It was alleged that the corporation forced computer developers to have the Internet Explorer browser installed in their PCs as a pre-condition to gaining "the right to sell their PCs with the Windows 95 Operating System included" (Farlex, 2014).

It was held that Microsoft had violated the Sherman Antitrust Act; first, by making use of anticompetitive arrangements to monopolize the market and ensure it maintained its monopoly power, and secondly, by having its web browser unlawfully tied to its operating system. Section two of the Sherman Act bars individuals from undertaking any kinds of monopolization attempts (Farlex, 2014). I have included the link to this particular news article in the references section of this text.

Are Monopolies and Oligopolies Bad for Society?

Monopolies and oligopolies can only be harmful to the society if their formation and operations are not properly controlled and regulated. Monopoly power, if left unchecked, would result in stifled innovation, unreasonably high prices, and foreclosed markets (Shughart II, 1995). This would imply that resources are inefficiently allocated, resulting in inequalities and welfare loss (Shughart II, 1995).

The 2008 financial crisis is a perfect example of a situation in which the society had to,….....

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"Antitrust Law The Microsoft Company Probe Antitrust" (2014, January 21) Retrieved June 4, 2026, from
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"Antitrust Law The Microsoft Company Probe Antitrust", 21 January 2014, Accessed.4 June. 2026,
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