Answered: Do you think the Court is correct in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 3

Judge Thomas Penfield Jackson finds that Microsoft is a relentless and predatory monopolist.

Judge Jackson says that:

Microsoftestablished and maintained the Windows monopoly by using the "applications barrier to entry," which gives Microsoft enduring monopoly power.
Microsoftharnesses independent software vendors to create products that take advantage of new application program interfaces (APIs) built into each release of Windows.
Gives PC makers no choice but to install the new operating system, at whatever price Microsoft decrees.

Microsoft maintains that it has sought only to innovate, serve customers, and protect its intellectual property.

Microsoft says that it is not a monopoly because:

It competes with itself by continually releasing "new and improved" versions of Windows.
Technological change will ensure that any dominance it enjoys is fragile.
Already, "middleware" (applications like RealNetworks) have their own APIs, which new and existing applications might hook on to liberating software developers from the operating system beneath and weakening the applications barrier to entry.

Do you think the Court is correct in finding Microsoft a monopoly? Explain.
Do you think Microsoft’s counterclaim is correct? Explain
Explain what is meant by ‘collusion’ and when it is most likely to occur in an industry.

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