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  • Please discuss the anti-trust cases against Microsoft in both the United States and Europe, noting the differences in their allegations and their outcomes.  Please base your argument on the information in your text, the video interview with Gary Reback, and the European Union’s paper on Microsoft’s anti-competitive conduct.

Cummins, Suzanne: Black, White and Gray: Law and Ethics in Business, DZ Publishing



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While both the American and European anti-trust cases against Microsoft began similarly, they diverged in outcome. 

The American case began in 1997, when the Department of Justice and twenty U.S. states argued that it was illegal for Microsoft to bundle its Windows operating system with its Internet Explorer browser in order to secure a monopolistic advantage. The Justice Department asserted that Microsoft's practice led it to dominate the web browser market at the expense of third party browsers such as Firefox and Netscape.

Microsoft was also guilty of entering into agreements with Internet Access Providers and independent software providers to promote Internet Explorer to the exclusion of other browsers. Many industry experts proclaimed that the eventual court settlement was too lenient. Essentially, Microsoft had to refrain from continuing its anti-competitive Internet Explorer agreement with internet providers and software providers. It also had to allow third party vendors to install competing software programs, if they wished.

In regard to interoperability, Microsoft had to disclose how its Windows operating system interacted with middleware products like its Internet Explorer browser. This would allow independent software providers to configure the Windows interface according to their specifications. 

In contrast with the American settlement, the European Union slapped Microsoft with the largest anti-trust violation fine in Europe: almost 500 million Euros. The European Union found Microsoft guilty of making its Microsoft operating system incompatible with non-Microsoft work group servers and for tying its Windows Media Player to its operating system. In addition to the substantial fine, the European Union demanded almost immediate compliance to its requirement that Microsoft disclose the process by which its operating system could be made compatible with non-Microsoft work group servers. 

The difference in outcomes concerns Gary Rebach, who was interviewed by Michael Arrington of TechCrunch on the topic of technology and anti-trust legislation. Gary Rebach is the author of Free The Market: Why Only Government Can Keep The Marketplace Competitive. Rebach's concern is that Microsoft continues to function as a monopoly; he states that anti-trust legislation and ensuing government supervision are the only factors that can protect the free market from companies like Microsoft. 

While Rebach doesn't think that Microsoft should be broken up, he believes that government litigation will clear the way for start-up companies to compete freely in the market. Once the market is freed up, new technologies will emerge. That's the beauty of the free market: it leads to lower costs, more choice, and more innovation. Anti-trust laws protect competition, which is crucial to the free market. On the other hand, the U.S. court settlements in 2001 did little to rein Microsoft in. Microsoft's pledge of supporting interoperability and open standards have largely been made only for the purposes of placating the courts. 

Rebach equates the Microsoft settlement with the Google Books settlement. In 2005, the Author's Guild filed a lawsuit against Google, accusing the company of massive copyright infringement for its practice of digitizing copyrighted books and materials. However, Google won the case in 2013: Google defeats...

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authors in U.S. book-scanning lawsuit. Rebach argues that the Justice Department must protect consumers and ultimately the free market against such practices. To expand upon his argument, he questions whether companies like Microsoft and Google should be allowed to get too big in the first place.

Rebach compares the role of an anti-trust system to a referee in sports. The referee isn't supposed to influence the outcome of the game, but he is supposed to prevent opposing teams from securing unfair advantages over the other. At this point, Arrington raises an interesting question: who will protect us from a government which tries to control more and more of the economy? 

Rebach also discusses the issue of patent settlements, an issue addressed in the consumer choice article. Basically, Microsoft has used the threat of litigation to intimidate Linux and open source software companies into compliance with its licensing requirements. The company has so far made the claim that Linux and third party vendors have infringed upon 235 of its patents. This means that many Linux users are compelled to pay royalty-bearing licensing fees in order to avoid potentially costly litigation.

Essentially, the argument (based on the Youtube video and articles) is that effective anti-trust legislation and government intervention is needed to protect the integrity of the free market and to promote competition within that market.

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