Every market functions under the rules of supply and demand. The market economy is supposed to have a fair competition, but due to various circumstances this condition is almost impracticable. This happens because every firm has its own characteristics and sometimes has an opportunity to influence the level of prices, making use of its dominance. Here the government comes into operation to protect the competition and therefore consumers’ interests; in the US such situations are regulated by the Sherman Antitrust Act. One of the most striking example of such case is the antitrust claims faced by Microsoft Corporation.
Microsoft provides the most wide-spread computer operating system in the world, which means that this corporation already has somewhat monopolistic position at the market: its product is unique and has a very high demand. Apart from the operating system itself, Microsoft also develops and produces a wide range of computing products. When in May 1998 the Corporation was charged with the monopoly, web browser Internet Explorer sales were the central issue: the prosecutor stated that it was a separate product, but not a feature of the Windows operating system. To my mind, first of all it is necessary to determine what – product of feature – the Internet Explorer is. The operating system definition states that it provides the basic functions and the access to the Internet is one of the most popular functions that computer owners use, besides, there are several file types that may be opened only by a web browser. Thus, the web browser is a necessary part of almost any computer software. Like any company, Microsoft aims to satisfy the needs of their customers as fully as possible, so here we deal rather not with the monopolistic wars, but a significant change in the computer software in response to the level of technological development and growing number of Internet users.
The difference between the completion and aggressive actions is subtle; the gain of the rivalry is the customers’ favour, which is highly valuable when the main competitors supply almost equal products by quality. Taking into account the fact that the buyers of Microsoft Windows operating system received the web browser as well, proves that the prosecutor did have what to charge with, because the Corporation provided a product (if it was a product, not a feature) for no additional cost. Usually when we speak about aggressive competition, we mean a price reduction. I think that the Microsoft’s actions can be explained by the desire to have a competitive advantage, which fully complies with the rules of competition.
Taking into consideration the circumstances, it is important to admit that this case is very conspicuous in terms of governmental participation in business. Here I agree with famous economist Milton Friedman, who said that the antitrust laws “do far more harm than good” (1999). The main problem of antitrust law is the decision of whether a company’s actions restrict competition or not. Ideally, this decision should be made by a commission of …