Microeconomics

Money, Business, and Competition are some of the fundamental concepts of capitalism. The U.S is a capitalist country, but also somewhat of an enforcer to equal opportunity for all people to explore their business endeavors. Competitors always need a referee that regulate, mediate, and make logical judgments. The goal of businesses in the 1800’s was to form a trust or also known as a monopoly in order to prevent competition from other firms to enter the same line of business. The Antitrust Laws are a product of the U.S. government’s plan to ensure that no business can limit competition for others.

The first law made was the Sherman Antitrust Act of 1890, which was designed to regulate the competitive process. This caused debate during that time because it contradicted the ideology of the U.S. which favored “laissez-faire”. Government involvement in businesses effected competition and business prices. The first section in the Sherman Antitrust Act declared that “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among several States, or with foreign nations, is hereby illegal.” The second section summed up the punishment that would be enforced if businesses violated the first section.

In 1914 Congress passed the Clayton Antitrust Act and the Federal Trade Commission Act (FTC), which declared “specific monopolistic practices and unfair methods of competition” illegal. The Clayton Act was solid, but the FTC Act was too

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broad and ineffective for about 20 years. In this case “Trail and Error” was the concept for perfecting and molding the FTC Act.

Over the years there were many cases that challenged the Antitrust Laws and the government regulated and even took businesses to trial. An important case was the Microsoft case in the 1990’s. Microsoft made computer software and were a fast growing company that started about 30 years prior to the case. Their predecessor IBM had a similar case that raised issues about their competitive methods and the government’s role in the competitive process. Microsoft software grown to 50 percent of the world’s software market along with more than 90 percent of the world’s operating system. Microsoft was charged in 1998 for violating the Antitrust Laws by processing monopoly power and tying other Microsoft software products to its Windows operating system; entering into agreements that keep computer manufacturers that install Windows from offering competing software.

In the year 2000 they were guilty for violating the Sherman Act. An appeal was made to the courts and a compromise was established. Microsoft made an agreement not to engage in certain practices as a means to resolve their issues between them and the government. The offer was accepted but the government vowed to watch Microsoft closely. There were disagreements between the state governments about this matter because Microsoft was still growing and possible litigation would be more difficult.

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With the information that was given the first question would be, “Is Microsoft a Monopolist”? Opportunities and Competition are linked in the business market. Microsoft had to compete with a bigger company and figure out how to deliver and improvise their product versus their competition. Microsoft seized their opportunity but now for the business sake they must stay sharp and keep improving their product. Competition was only limited because other businesses could not figure out how to overlap Microsoft, which means it may be possible that Microsoft has fulfilled every want that the consumers desire. Microsoft didn’t establish a monopoly, the consumers made it into a monopoly. What business would not want to fulfill the consumers’ desires and make as much profit as possible? There are still competitors like Apple and Linux, but Microsoft is what the consumers want and their competitors are not decreasing Microsoft’s