Question-2: Playing Monopoly:
Question-2:
Playing Monopoly: Microsoft
The success of Bill Gates together with his company Microsoftand the most favors Windows computer operating systems that arestill dominating the PC operating system market has always been anexcellent example stimulating the youths in the It industry tofollow. But the business success and seemingly amazing technologyinnovation should not be very strong reasons why the ethical issuesrelated to Microsoft and its co-founder Bill Gates could berationalized and tolerated. Since the company’s first operatingsystem, MS-DOS (the prototype of which was brought from Gate’sfriend without notifying his friend about the later usage of thesystem), the company been involved in a number of issues from whichsome of the business practices and some decisions are criticized interm of breaking the moral rules and create unfairness in theindustry. For example, after the release of the first Windows
system, many Macintosh (an Apple personal computer) userscomplained Microsoft had “stolen” the look and feel of the andApple by developing a similar operating system following Apple interm of similar pull-down menus and icons and usage of mouse. Andsimilar victims also include the famous browser developer, Netscapeand the Sun Microsystems, the Java language developer.
In the year 1981, Bill Gates purchased an operating systemwritten by his friend for $60,000. But he sold it to IBM withoutinforming his friend. After that IBM licensed it as MS-DOS. Thoughthe deal became profitable but Gates failed if ethical values ofhim are evaluated. Microsoft at that time was owned by him and hisfriend, so any decision taken by either of them beforeimplementation should be well acknowledged by both of them. Gatesdidn’t think of it and without informing his friend about themeeting offered that operating system to IBM.
In the year 1984, Apple launched a new operating system for itscomputers which have advanced graphics aiding users to select iconsand pull down menus on the screen with mouse. This operating systemoutperformed MS-DOS which uses characters to issue commands to thecomputers to perform the task but now commands can be issued byselecting icons. Then in 1987, Microsoft released a new operatingsystem with IBM machine which copied the advanced graphics idea ofApple and named it Windows. On ethical terms, this was totallywrong on part of Microsoft copying the concept of Operating Systemof Apple which was all copyrighted.
In 1990, Netscape emerged as a new competitor for Microsoft innetwork market and launched in Dec, 1994, a new advanced webbrowser called Navigator. People started feeling lack of importanceof Operating System and in their eyes browser became dominant.Netscape sales increased creating a threat to Microsoft. Withresponse to the same Microsoft introduced its web browser calledInternet Explorer by copying all the features of Netscape’s webbrowser. Internet Explore was also first licensed by Spyglass Inc.to Microsoft. The chairman gave taunting comments
on Microsoft that this company can build itself the software youhave developed and have licensed to them and then issue it in itsOS and is put to use. Ethically again, copying features of Netscapewas not a step to be taken.
In the year 1995, Microsoft saw the threat arising fromnavigator; a web browser by Netscape and Java by Sun Microsystemsand therefore arranged a meeting with Netscape executives andproposed them to serve its browser to the users not using windowsonly i.e. 10 percent of the computers that run on Apple’s OS/2,remaining using Windows will be served by Microsoft’s InternetExplorer and later after refusal by Netscape on this deal,Microsoft refused to even share the codes of Windows 95. By 1995,Microsoft had built Internet Explorer so as to compete withNavigator and the monopoly they thought was incorporating InternetExplorer in Windows. Windows incorporated a copy of InternetExplorer with its operating system which was the default browserfor the computer and users were unable to remove its icon. Thusethically Microsoft didn’t think about the consumers. Consumers nowwere bounded to use Internet Explorer only as Windows didn’t allowany other browser to get installed. Moreover Windows alsoincorporated a copy of digital media player with its operatingsystem. Windows 98 also contained some codes for Internet Explorerbut was made slow in functioning by the company so that usercouldn’t even think of removing embedded software within Windows asit now became risky and slow.
In early 1998, Microsoft polluted the Java’s market byintroducing Microsoft’s Java which was basically the property ofSUN. It has removed Java’s platform independent feature and made itby default available with its operating system. Microsoft enteredinto an agreement with Sun Microsystems for giving it right tolicense and to distribute Java with Windows. Later Microsoftchanged Java and embedded it with Windows and was calledMicrosoft’s java.
It is very much clear about incidences that Microsoft has beenunethical in its approaches. Rather that applying their ownthoughts, most of the products they
have released by copying ideas unethically from othercompetitor’s products. Rather than having the fair competition inthe market Gates always tried to monopolize the market. Though allthe monopoly has brought him profit but ethically Microsoftdidn’t’
Answer Both Questions:
A. What characteristics of the market ofsystems do you think created monopoly market that Microsoft’soperating system enjoyed? (500 words)
B. With reference to the case suggest how theMicrosoft might differ if this had been a (monopolistic)competitive environment. (500words)
Answer:
Answer:A.Some of the characteristics of the market that created monopolymarket that Microsoft’s operating system enjoyed are asfollows:
Incorporation of various Microsoft applications like WindowsDigital Media Player and Internet Explorer in 1995 with itsoperating system gave an advantage to the company as this monopolyworked out for them. Users using Windows didn’t want themselves toget into trouble of purchasing a different browser and differentMedia Payer. Users were also not ready to pay extra money forbuying other companies’ applications, as all those applicationswere readily available with Microsoft’s operating system.Every company was releasing their applications and operatingsystems in the market and every time Microsoft was able to knowtheir programs. Using those programs Microsoft created monopoly inthe market by releasing advanced version of competitors’ products.As when Navigator came in 1994, Microsoft launched InternetExplorer which was borrowed from Spyglass Inc. and made it similarto Navigator. It incorporated Internet Explorer with Windows. Mediaplayer was also incorporated in Windows. Sun Microsystems’s Javawas also licensed to Microsoft first and then Microsoft built itsown Microsoft java permitting Windows Users to be compatible withit.In the software industry users did not want to shift to newproducts or applications until proper training and workshops areorganized. Microsoft’s used good strategies for training users.With the Installation disk, a proper tour of Windows is provided tofacilitate user.
Restricted entry in the market leads to monopoly conditions forthe Microsoft. Also non Restricted e of the markets had challengedthe products of Microsoft which led to monopoly for thecompany.
B.In monopolistic competitive environment, there is no restriction onentry and exit of the firm which leads to fair market conditions inthe market. Also, product differentiation exist and in this caseone firm cannot copy the product of others in the market. Thisleads to lack of unethical practices by the firms.The Microsoft monopoly is self-evident, if the Justice Department’slawyers are to be believed. In the complaint filed againstMicrosoft in the U.S. District Court of the District of Columbia onMay 18, 1998, the Justice Department declares unequivocally that“Microsoft possesses (and for several years has possessed) monopolypower in the market for personal computer operating systems.TheJustice Department’s lawsuit merely reaffirms the position U.S.Attorney General Janet Reno had previously staked out: “Microsoftis unlawfully taking advantage of its Windows monopoly to protectand extend that monopoly.” Hence, it seems beyond dispute that theJustice Department’s antitrust assault on Microsoft will, ifsuccessful, produce benefits for the American public. “We tookaction today [in the courts],” Reno announced earlier this year,“to ensure that consumers will have the ability to choose amongcompeting software products”
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