5/15/12 Date 1993 1994 1998 2000 Events

- Nikhil Punwaney 12D

Novell launches complaint on Microsoft for creating artificial barriers and using anticompetitive practices Microsoft settles dispute with Novell by ending some license practices Sun Microsoft launches complaint to European Union regarding Microsofts artificially created dominant position as the supplier of operating systems for personal computers European Commission opens an investigation regarding Microsofts unlawfully inclusion of capabilities with reference to Media Playback in Windows Commission levels second charge at Microsoft - that it violates antitrust laws by tying its Windows Media Player with the OS in an attempt to freeze out RealNetworks' RealPlayer - and merges it with the server accusation of the year before EU receives complaints from Microsoft competitors that Windows XP is designed to extend Microsoft's desktop monopoly into instant messaging and mobile phones European Commission issues a statement requiring Microsoft to revise the Media Playback capabilities in Windows and for all information regarding server communication available to competitors European Commission fines Microsoft 613 million Microsoft releases new version of Windows in compliance with the statement issued in 2004 Microsoft makes all technical documents available in order to follow protocols issued in 2004. European Commission objects stating that the information provided is not in compliance with the statement Microsoft expands manpower in regards to documentation up to three hundred personnel European Commission fines Microsoft 280.5 million for inadequate technical information European Commission issues objection stating that Microsoft pricing for its patents are unreasonable Microsoft appeals to European Court of First Instance but all complaints are disregarded European Commission declares Microsoft to be in full compliance with statements issued in 2004 European Commission announces two new investigations: One based on complaints by competitors regarding interoperability One by European browser maker, Opera regarding the inclusion of Internet Explorer Homework Mr. Egan

August 2001

January 2003

March 24th 2004

June 2005 December 15th 2005 January 24th 2006 July 12th 2006 March 1st 2007 September 17th 2007 October 22nd 2007 January 14th 2008

Economics

5/15/12 February 27th 2008 January 15th 2009 July 24th 2009 December 16th 2009

- Nikhil Punwaney 12D European Commission fines Microsoft 899 million for protocol pricing prior to October 22nd 2007 European Commission issues a Statement of Objection regarding inclusion of Internet Explorer Microsoft proposes a compromise regarding Internet Explorer and interoperability European commission accepts proposals made by Microsoft

A monopoly is defined by the exclusive possession or control of the supply or trade in a commodity or service. It is the presence of only one firm producing a product in an industry, through the presence of barriers to entry into the industry, through imperfect knowledge by producers and consumers of production and pricing and through abnormal profits. At one point of time, Microsoft was accused of utilizing monopolistic power in the technology industry. In order to minimize misuse of monopolistic power and encourage competition, governments have setup competition commissions that regulate firms from creating barriers to entry into a firm and from using other anti-competitive techniques. On a larger scale, the European Union Competition Commission is one of these competition commissions; however, it mainly regulates competition between multinational companies and therefore encourages competition at a national scale. The European Union Competition Commission has had many disputes with Microsoft regarding the misuse of its dominant position in the technology industry. The dispute started in 1993, and consequently, over the past nineteen years, the European Commission has fined Microsoft in numbers varying from as little as 200 million to 900 million intermittently. However, there have been many arguments regarding the extent to which the fines are beneficial to society. There are many advantages to the fine; firstly, increased Microsofts costs this meant that the price at which their goods were sold increases and thus demand for their goods would decrease as consumers would find alternatives. Furthermore, this made Microsoft reluctant to use more monopolistic power in fear of being fined more money. Secondly, the threat of Microsoft losing more money made them work faster towards improving the level of perfect knowledge in the industry for example, in 2006, Microsoft employed over three hundred personnel to improve technical documentation to distribute in the industry. Thirdly, the funds raised by the European Commission could be used not only to regulate competition more thoroughly, but also to expand its regulation far out into smaller firms and industries. The benefit of making a market more competitive is that the prices reduce, service improves, the incentive to innovate increases and firms tend to offer non-price competition related services. Furthermore, there is consumer sovereignty rather than producer sovereignty. On the other hand, there are also many disadvantages; firstly, the increase in costs to Microsoft could prevent further research and development of new products that would have been beneficial to the society and the economy. In the case that there are no alternatives, consumers will be forced to pay for the increase in costs and therefore, the European Commission is indirectly affecting the consumers. Also, the implementation of fines and, as in this case, the disputation requires a lot of paperwork, time and funding which could be used more productively elsewhere. The ongoing debate on whether the implementation of the fines is both favorable and unfavorable from different aspects the main focus on the outcome of the fines depends on the effect on the firms Economics Homework Mr. Egan

5/15/12

- Nikhil Punwaney 12D

beneficial factors to society such as research and development plus of course, the question of its effect on the monopolistic behaviour of the firm. Based on recent events, the tax seems effective as Microsoft has abided by the conditions set by the commission and thus has improved competitiveness in the industry.

Economics

Homework

Mr. Egan