Operating+System+Monopoly?

media type="file" key="Operating Systems.mp3" width="240" height="20" [|Operating Systems.mp3] OPERATING SYSTEMS-MONOPOLIES

Monopolies develop in certain industries when there are many buyers but only one seller for a product or service, or sometimes when one seller has a huge proportion of the sales. Sometimes, monopolies happen when one company sells a superior product. Other times, a successful company may become so big that it is almost impossible for new businesses to start up and compete with it. Natural monopolies occur when there is an advantage to size, and there is really room for only one company. In these cases, it is possible to attain a dominant position in the market with a mediocre product. Some monopolies are legally granted by government-sponsored protectionism.

In recent years, Microsoft has been accused of creating a monopoly with unfair practices, where they become the only option for consumers looking for software. Microsoft has a near-monopoly with its popular Windows operating system, but it does not share code with competitors, who therefore cannot make software that will work well on Windows. Therefore, it is extremely difficult for a competitor to make and sell software to be used on Windows. This reduces the number of competitors. As well, people are concerned about how Microsoft bundles other applications (e.g., Internet Explorer) with Windows. Microsoft uses these bundles to make sure there is no need to purchase other software.

Recently, Microsoft has been the target of Lawsuits challenging the business practices that result in monopoly. Anti-trust laws are laws that discourage monopoly and restrictive practices. They encourage greater competition, and most countries have them in place.

The U.S. Department of Justice filed a case against Microsoft, alleging that the company abused its monopoly power with respect to operating systems and web browsers. Microsoft bundled the Internet Explorer web browser with Windows, which restricted the market unfairly for competing web browsers such as Netscape Navigator.

In November 2001, the United States and Microsoft reached an agreement that required Microsoft to share its application programming interfaces with third-party companies, which could then make and sell Windows-compatible software. However, the settlement did not require Microsoft to change any of its code, nor did it prevent Microsoft from tying other software to Windows in the future. Similar lawsuits have been launched against Microsoft by the European Union (EU).

Questions

1. To what extent do you agree or disagree with the fairness of Microsoft having to share its code with competitors? Explain your position.

2. Microsoft has been criticized for bundling software with Windows. What advantages does bundling have for the consumer? For Microsoft? What disadvantages does this practice have for consumers? For competitors?

3. The EU ruled that Microsoft had to share its code with competitors. Do you think this is a fair ruling? Why or why not?

4. Microsoft was fined by the EU for not complying with the requirement to share source code. The fine is $600 million, and is growing daily. Is fining a company an effective punishment? Why or why not?

5. What laws, if any, should be in place to govern the software industry?