Antitrust Legal Issues

    The first issue that must be decided in the case is that of market power, and monopoly. Microsoft's Windows operating system controls 80% of the market for desktop computer operating systems, and 90% of the market for PCs (IBM-compatible desktops). That is, essentially, a monopoly.

    Also, it is relatively undisputed that Microsoft holds a tremendous deal of market power. There are two markets in question here. There is the physical product market of computer operating systems and the innovation market. Basically the concept is that firms are considered to produce innovation, or technological development, along with their actual tangible products. If market power is achieved in either market, and this market power is exercised, the result is thought harmful for consumers.

    If market power is exercised in a market, the result is increased prices and decreased output, because without competition the firms seek to gain the most profit. The way to do this is to produce less and sell it at a higher price. In an innovation market the result is less innovation, which is harmful to the consumer.

Back    |    Next
    Index