ECN121B – Industrial Organization II page 1 of 1 Prof. Muehlegger
Case Write-up: Microsoft on Trial Due: In-class before case discussion
Read the case “Microsoft on Trial” in the case packet and respond to the case question(s) below. You are welcome to discuss the case as a group, but each person must write their own response. Responses that are identical will not receive credit. Please limit your response to a single page. It can be typed or handwritten, single-spaced or double, but needs to be a single page. So pick your best argument for each question. Based on your reading of the case, respond to the following question(s):
(a) When determining the relevant market for operating systems, would it make sense to include used
computers with older versions of Windows as part of the market? Based on your answer, does Microsoft have a “dominant market position” in the market for operating systems?
(b) Microsoft participates in a variety of conduct alleged to be anti-competitive including: (a) bundling
Windows 98 and Internet Explorer, (b) distributing Internet Explorer for free, and (c) using other Microsoft products (e.g., Windows 95 and Office) as chips when bargaining with Compaq, AOL and Apple.
Pick one of the three pieces of conduct above and discuss whether the conduct goes “beyond what would be expected of firms competing fairly on the merits of their products and costs?”
(c) If Microsoft is found to have violated the Sherman Act, what remedy(ies) would you suggest would address the anticompetitive concerns? Explain.
In addition, please think about the following questions you read the case. Do not include a response in your case write-up. Rather, these questions are to help you prepare for the case discussion.
• Should Microsoft worry about an entrant with a new operating system?
• What is it about Java and Netscape Navigator that makes Microsoft so concerned?
• This case happened when internet browsing was in its very early stages. If this case where brought today, would you reach the same conclusions?
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