Paul L.

Schumann MGMT 482/582 Business, Society, & Ethics Case #3 Playing Monopoly: Microsoft Read: Velasquez (textbook) pp. 252259, and the following 9 articles before coming to the class in which we will discuss the case (Monday, November 3, 2003) as there may be a quiz on them: (1) Heres a news article that summarizes Judge Jacksons decision (6/7/00): http://news.com.com/2100-1001-241578.html (2) Heres a news article that summarizes the decision of the US Court of Appeals in their review of Judge Jacksons decision (6/28/01): http://news.com.com/2100-1001-269179.html (3) Heres a news article that summarizes the order of the US Court of Appeals to replace Judge Jackson with a new judge, Judge Colleen KollarKotelly (8/24/01): http://news.com.com/2100-1001-272110.html (4) Heres a news article that summarizes the proposed settlement between Microsoft and the US Department of Justice (11/2/01): http://news.com.com/2100-1001-275317.html (5) Heres more information on the proposed settlement (11/2/01): http://news.com.com/2100-1001-275341.html (6) Heres a news article that summarizes Judge Kollar-Kotellys decision on the proposed settlement (11/1/02): http://news.com.com/2100-1001-964339.html (7) Heres a news article with updated information on the settlement (11/8/02): http://news.com.com/2100-1001-965117.html (8) Heres a news article that summarizes some concerns about whether or not Microsoft is complying with the terms of the settlement (10/24/03): http://news.com.com/2100-1014-5096861.html (9) Heres a news article that updates the status of the lawsuits filed by individual states against Microsoft (10/28/03): http://news.com.com/2100-1014-5098065.html

Additional Background Information: The following website from the US Department of Justice Anti-Trust Division has lots of information on the Microsoft case: http://www.usdoj.gov/atr/cases/ms_index.htm As the case in our textbook describes, Judge Jackson handed down his decision in the Microsoft case on June 7, 2000. Following are two tables that report some market share information in the years immediately before Judge Jacksons decision in the Microsoft case: Desktop OS Market Shares 1999 Operating System Microsoft Windows Microsoft WinNT Linux MacOS Market Share 66% 21% 4% 5%

Server OS Market Shares 1998 & 1999 Operating System Microsoft WinNT Linux Netware Unix Other Questions 1. What are the two key characteristics that define a true monopoly? What are the two key characteristics that define an oligopoly? 2. In his finding of fact, Judge Jackson ruled that, in his opinion, Microsoft had a monopoly with the Windows operating system. (To read his findings of fact, on the USDOJ website (http://www.usdoj.gov/atr/cases/ms_index.htm), scroll down to the section with the heading District Court Filings and click on the link labeled Findings of Fact and then click on the link labeled Courts Findings of Fact (11/5/99).) 199 8 38% 16% 23% 19% 4% 199 9 38% 25% 19% 15% 3%

3
A. In his findings of fact, how did Judge Jackson define the relevant market in order to reach his conclusion that Microsoft had a monopoly with Windows? B. In his findings of fact, what barriers to entry did Judge Jackson identify in order to reach his conclusion that Microsoft had a monopoly with Windows? 3. Not everyone agrees with Judge Jacksons ruling that Microsoft had a monopoly with the Windows operating system. For example, heres a link to a critics opinion: http://www.cato.org/dailys/04-06-00.html Do you agree with Judge Jackson or with his criticsin your opinion, does Microsoft have a monopoly with the Windows operating system? Explain. 4. In your opinion, based on your knowledge and experiences with computers, did Microsoft earn their market position with Windows, or did they achieve their market position by illegal or immoral methods? Explain. 5. In the anti-trust context, what is meant by tying? What are the allegations of tying in the Microsoft case? Under what conditions is tying illegal in the US? How was the tying issue decided in the Microsoft case? In your opinion, was there illegal tying in the Microsoft case? Explain. 6. What was Judge Jacksons proposed remedy? Would you characterize his remedy as a conduct remedy or as a structural remedy? Explain. Do you agree with his remedy? Explain. 7. Why did the US Court of Appeals order that Judge Jackson should be replaced? Summarize the areas in which the US Court of Appeals agreed with Judge Jacksons decision, and summarize the areas in which the US Court of Appeals disagreed with Judge Jacksons decision. 8. Summarize the proposed settlement between Microsoft and the US Department of Justice. Do you agree with the settlement? Explain.