Government Intervention in Individual Markets:A Look at Government Intervention and Antitrust Law via the Microsoft CaseGrowth and Development in the US EconomyIn light of recent developments, I took a different approach to this paper. The Microsoft Antitrust case has been somewhat of a phenomenon that has become one of the most prominent cases in recent years. Because of this, I decided to look at government intervention into individual markets, along with antitrust law, via that particular case. I am of the opinion that we can learn a great deal by using that particular ongoing litigation.
Antitrust law protects the public from companies that attain an undue domination of the marketplace via mergers, tying 1 product to another, vertical integration, and other practices tending to eliminate competition or bar entry into the market to newcomers.
In the early 1980s, Microsoft was a much smaller company than it is today. However, it had already established a reputation of being a predator, a greedy predator. They were known to terminate licenses mercilessly once they figured out a way to clone a given technology, regardless of whether it was legal or not. Back then, Microsoft had some enthusiastic competition. The biggest of which were Borland (programming), Ashton-Tate (databases), Visicalc and Lotus (spreadsheets), as well as Wordstar and WordPerfect (word processors). All of these companies have now either merged out of existence or are completely defunct, with the exceptions of Borland and Lotus (which are barely afloat). Microsoft now has the leading product in each sector of the market once occupied by these firms. The company was responsible for ridding itself of these early competitors by either buying them out or simply driving them into the ground. This early disregard set the tone for how Microsoft does business even today.
Microsofts advantage comes from their domination of operating systems (OS). By definition, if the OS maker creates applications, they will run better with the OS than a third partys, and the OS owner can, over time, create modifications that will make this even more so, (Rapacious 1). Microsoft has the power to leverage their dominance in operating systems (Microsoft currently has its Windows software in over 90% of all PCs) to gain a large market share in the various application sectors. They have always been able to do this and as a result have been able to get, or achieve, whatever it is that they have wanted. This is the vertical integration that the antitrust laws talk about.
In a July 1994, settlement, the Justice Department came to an agreement with the software giant over the antitrust charges it had filed against the company. The charges were brought after the department found out that Microsoft was giving personal computer manufacturers a discount on their OS when the PC manufacturer would pay the company a royalty for each computer sold, including those without MS-DOS or Windows software installed. The practice gave PC makers little incentive to install competing programs since they would have had to pay a royalty to both the competitor and Microsoft, (Ramstad 1). The settlement only dealt with this single count and left Microsoft alone to continue performing its numerous other anti-competitive practices.
In the spring of 1995, Judge Stanley Sporkin rejected the deal that the Justice Department settled on. He did so on the grounds that:1.The government refused to give the court enough information about the agreement;2.The deal was too narrow; it failed to deal with issues like OS/application leverage, and allegations that Microsoft intentionally made changes to Windows that made third party applications hard to run; 3.The parties did not adequately consider anti-competitive issues; 4.The deal was unsatisfactory when it came to enforcement and compliance mechanisms.
Around the time of the settlement, some suggestions started to come about how to deal with Microsoft. Stewart Alsop suggested that Microsoft be forced to document the APIs in Windows, so that other companies could legally clone it. That would still leave Microsoft an eighteen month head start on each release, (Rapacious 3). It was also suggested that the company be broken up. This way, the operating system and the applications would be separated into different companies and the playing field would become more level.
In late August 1995, U.S. District Judge Thomas Penfield Jackson ended what had become a thirteen-month judicial review by signing the agreement Microsoft and the Justice Department had come to. The review had been elongated by Judge Sporkins rejection of the deal. The signing, however, did not take the heat off Microsofts proverbial back. The Justice Department had already begun investigating some of their concerns about the companys practices regarding new software and whether they were complying with the agreement. This investigation became the court case we have all been hearing about in these last few months.
By the time the Judge Jackson signed the agreement, the government was already looking into Microsofts decision to include access to its on-line service, the Microsoft Network, into its Windows 95 operating system. Competitors were afraid that this would allow the company to once again take advantage of its monopoly power in operating systems to gain a large share of the on-line market.
A mere three months after its release, the company announced that the Microsoft Network had already enrolled more than 525,000 members. They also had projections putting them over the 2 million member mark by the end of the next year (1996). This went on to fuel its competitors worst fears. America Online, Prodigy and CompuServe were among those that had long been arguing that Microsoft had an unfair advantage with its on-line access included in the OS. The industrys fears are partially correct. Having a button on the desktop works. People click on it, said Adam Schoenfeld, of Jupiter Communications, (Cooper 1). Microsofts response to the situation at that time was merely to suggest that there was no evidence showing MSNs close connection to Windows 95 had tilted the tables into its favor.
In September of 1996, Microsoft received a written request for information, (this is known as a civil investigative demand) from the Justice Department. Netscape had accused the company of going beyond vigorous competition into the realm of illegal tactics in the browser war, (Just. Dept. Examining 1). Netscape also charged, through letters to the Justice Department, that Microsoft had violated its 1994 consent decree (settlement) with the government by offering PC manufacturers a $3 discount on Windows 95 for giving their browser, Internet Explorer, a more prominent place on computer screens than Netscapes browser, Navigator.
Further complicating Microsofts problems, they received another civil investigative demand in May of 1997. This time, the Department of Justice was seeking internal documents having to do with Microsofts planned purchase of WebTV for $425 million. WebTV is a start-up producer of set-top boxes that bring the Internet to television sets, (US Requests1). A major industry is expected to develop from the delivering of the Internet via television and other home appliances. So, the opportunity to be among the first in a very promising market is what attracted the company to WebTV.
About the same time the government was looking into Microsofts purchase, Oracle (another software producer) announced it was buying control of Navio Communications Inc. Navio was developed by Netscape Communications, which, [facing] ever-stiffer competition from Microsoftdecided to conserve its financial resources and shed Navio, (US Requests2). Microsoft officials pointed to this move by Oracle in response to the governments most recent allegations. They claimed that the deal was a sign that their purchase of WebTV was prompting capable companies to get into the market, thereby promoting competition.
Drawing further attention to itself, Microsoft invested in Apple Computers. They purchased $125 million in non-voting stock. This act was seen by many, upon first glance, as an effort to further dominate the computer market by swallowing another competitor. However, if one were to consider the pressure that Microsoft was, and is, enduring from the government, one can see an entirely different motivation for the investment. Apple was struggling and this purchase of non-voting stock was designed to help keep the company afloat. As long as Apple remains intact, the computer giant we know as Microsoft has another competitor that it can point to in its fight against antitrust violations.
In October of 1997, the government finally asked a judge to order Microsoft to stop requiring PC makers to include Internet Explorer when they install Windows 95 in their computers. Attorney General Janet Reno, who referred to the company as a monopoly several times in her press conference, claimed that the company had violated the 1994 settlement, and that the Justice Department would seek a $1 million per day fine if they didnt stop the practice. She said, This administration has taken great efforts to spur technological innovation, promote competition and make sure that the consumers have the ability to choose among competing products. [This} action shows that we wont tolerate any coercion by dominant companies in any way that distorts competition. (Labaton 2)The governments petition was designed to receive an order that would bar Microsoft from compelling PC manufacturers to accept their browser as a condition of receiving operating system. It also asked the court to order the company to notify Windows 95 users that they can use any compatible Internet Browser, as well as provide instructions on how to remove Internet Explorer from their computer.
In response to the petition, Bill Gates, Microsofts chairman and chief executive, said that his company was not violating the antitrust agreement. He proclaimed his belief that his company had every right to improve and add to the basic features of Windows. He went on to say that he hoped to further improve Windows by adding new capabilities, such as speech recognition and machine vision.
The Justice Department has several key issues that it has to deal with in its case against Microsoft. By deal with, I mean they have to get around Microsofts answers to their charges. First, the department is accusing the company of threatening computer makers who delete the Internet Explorer icon. The company answers this by claiming that computer manufacturers are free to ship any competitor product they wish, but they are not allowed to disable features of our products, (Just Dept v MS 2). Second, the government is contending that the terms of Microsofts non-disclosure agreements are an obstacle in the way of their attempts to gather evidence for their investigation. Microsoft says that their non-disclosure agreements are no different than those of most companies within the software industry, as well as outside it. Finally, there is the matter of the competitive browser possibly representing a threat to Microsofts key product, its operating system. Company officials claim that by not allowing them to include their browser with Windows, the government is preventing innovation. They say that the pace of the competition will quickly pummel a company that stops innovating, and that the consumers win because competition drives firms to deliver better products at lower prices. In essence, Microsoft is claiming that by not allowing them to include the browser, the government is stifling the competition that it is trying to protect.
Orin Hatch, chairman of the Senate Judiciary Committee, held the first of what he claimed would be several hearings on the Microsoft antitrust petition in the first week of November 1997. At this hearing, the Senator produced an exclusivity agreement between Microsoft and Earthlink Network, Inc. It called for Earthlink to offer only Microsofts Internet Explorer and prohibits them from implying that another browser is available. What you have set forth appears to be a classic example of an artificial entry barrier. It is not designed to enhance the product. It is designed simply to hobble the competitor said Kevin Arquit (former general counsel of the Federal Trade Commission), (ClausingSenator).
After the hearing, Microsoft asked a federal judge to throw the governments petition out. They filed their response to the Justice Departments allegations with Judge Thomas Penfield Jackson (the same judge that signed the antitrust settlement two years earlier). The company is claiming that the governments case is without base, is implausible and is a perversion of the truth. According to what their claims, the original decree allows them to develop integrated products. The response also claims that the company realized long before Netscape was even a company that [Microsoft] needed to build this type of functionality into Windows for consumers, (ClausingMicrosoft 2). Netscape was founded in 1994. The first version of Internet Explorer wasnt released until July of 95, and that was a limited beta version.
In May of 98, the DOJ and the attorneys general of 20 states filed a pair of antitrust lawsuits against Gates company. The suits claimed that Microsoft used Windows to attempt to force customers to use their other software products, the most important of which was their Internet Explorer (IE) web browser, as well as targeting contracts used by Microsoft that required companies to put up a first screen that was created by the OS creators. The states and DOJ also sought an injunction that would have required Microsoft to strip IE from Windows 98, which was due on shelves at the end of June that year. Microsofts response to the injunction request was to claim that the IE browser cannot be taken out of Windows 98 system without severely damaging the functionality of the entire product. The injunction failed, had it been granted, though, Microsoft would have been required to remove the browser or include a copy of Netscapes Navigator and another competing browser with the OS.The lawsuits were to be heard by Judge Penfield Jackson, the same judge who heard the first lawsuit over the browser.
According to Michael Martinez of ABC News in his May 1998 article, comments were made by representatives of the DOJ, the states, and Microsoft. Attorney General Janet Reno said, Consumers and computer manufacturers should have the right to choose the software they want installed on their personal computers. We are acting to preserve competition in the software industry. New York Attorney General Dennis Vacco, who was heading up the states case along with the attorneys general from Iowa and Connecticut added, it is Microsoft who is acting like an Orwellian big brother by controlling the range of products available to consumers. The Microsoft response to the new allegations was to claim that attacking them for integrating their software was an attack on innovation. By going after the basic principle of integration, the government can conceivable go after a very broad set of things, Gates said (Martinez, Government).
Opponents of the renewed allegations were swift in coming to the defense of Microsoft. They point out that it was Netscape who dominated the browser arena early on and forced Microsoft to play catch up and aggressively market IE. Many people are of the belief that rivals of the software giant might have been better off focusing their attentions on improving their products rather than seeking refuge in the courts.
Mark Schmidt, the Director of Programs for the National Taxpayers Union Foundation (NTUF) argued against the claims that Microsofts anti-competitive conduct has resulted in higher consumer prices, less consumer choice, and decreased levels of innovation made by Iowa AG Tom Miller, in a September 1999 article (Schmidt, Lawyers). Mr. Schmidt claims that after figuring in inflation, the costs to computer manufacturers of installing the Windows and MS-Office programs have actually decreased. In response to claims of anticompetitive behavior, he quotes Mitchell Kertzman of Microsoft rival Sybase as saying Basically, all the big companies, all the companies that have won, are run by bloodthirsty killers, (Schmidt, Lawyers). As for decreased innovation as a result of Microsofts practices, well I must say that he has a very persuasive argument, The integration of Windows with Internet Explorer was an important advance for software users, who would almost surely find it easier to use an Internet Explorer that looks similar to and operates like Windows Even Ohio AG Betty Montgomery, who is suing Microsoft admits, Many Ohio consumers have benefited from the innovative products marketed by Microsoft of the past 19 years. (Schmidt, Lawyers)One of the proposed sanctions that would be placed on Microsoft should the DOJ and the states win their case would be to force them to sell or license its Windows source code (a blueprint of sorts, one that lays out the foundations of a piece of software). George Washington University Law School Professor William Kovacic warned, It also reduces incentives to innovate if a dominant firm is forced to share its hard-won assetslike intellectual property in the software businesswith other companies, (Schmidt, Lawyers). Schmidt also pointed out that in May of 98, 26 CEOs of major computer companies sent a letter to the Justice Department asking that they refrain from filing any additional charges against Microsoft (Schmidt, Lawyers).
On March 24th of this year, the Wall street journal reported that Microsoft sent a detailed proposal to the governments attorneys in an effort to settle the case. It was expected that the proposal contained price changes, separation of the Internet Explorer browser from the Windows OS, as well as some access to parts of the source code. It is believed that the proposal was brought about after weeks of talks because Judge Penfield Jackson said that if a deal wasnt reached soon, he would issue his findings of law. After ripping Microsoft in November (99), it seems that the Judge will find for the DOJ (WSJ, Microsoft).
There are questions as to how effective any of this antitrust litigation will be. If one looks back to some previous cases, it looks to be rather unnecessary. In 1969 the government went after IBM for allegedly violating antitrust laws. That case was dropped thirteen years later when their market share started to drop with emerging companies (including a young Microsoft) gaining. Schwinn Bicycle actually lost an antitrust suit in 1967, but foreign competition relegated the firm to bankruptcy in 1992. RCA, a once dominant radio and television producer was made to license products. They followed the Justice Department mandate and directly licensed to Japan, who now is the leader in the electronics industry. (Schmidt, Lawyers)There are going to be very definite repercussions to the Microsoft case, no matter what the verdict. We have to weigh the cost of these trials against what usually ends up being short term dominance by a powerful firm. If Microsoft is broken up, Bill Gates isnt going to be the only one that is affected. If theyre not broken up, it seems Netscape will have to suffer only moving 160 million units of their browser. It seems to me that the majority of consumers have benefited from Microsofts dominance and progress in software. Government intervention just doesnt seem to do anything but hinder that benefit. Bibliography:Work CitedClausing, JeriSenator Takes on Microsoft in Antitrust HearingsNew York Times,11/05/97,http://www.newyorktimes.orgMicrosoft Counters Justice Departments LawsuitNew York Times,11/11/97,http://www.newyorktimes.orgCooper, CharlesMSN surpasses half-million point as rivals stewPCWeek,11/20/95http://www.zdnet.com/pcweek/news/1120/omsn20.htmlLabaton, StephenGovernment Accuses Microsoft of Violating Antitrust AgreementNew York Times,10/21/97,http://www.newyorktimes.orgLohr, SteveJustice Department Examining Microsofts Internet StrategyNew York Times,9/20/96,http://www.newyorktimes.orgUS Requests Documents Concerning Microsoft Purchase of WebTVNew York Times,5/20/97,http://www.newyorktimes.orgMarkoff, JohnGates says His Company is not Violating Antitrust AgreementNew York Times,10/22/97,http://www.newyorktimes.orgMartinez, MichaelGovernment Sues MicrosoftABC News,05/18/98http://abcnews.go.com/sections/business/DailyNews/Mirosoft980513.htmlRamsted, EvanJudge approves Microsoft antitrust settlementThe Detroit News,8/22/95,http://detnews.com/menu/stories/14207.htmSchmidt, MarkLawyers Playing LawmakersNational Taxpayers Union, 9/9/99,http://www.ntu.org/issues/taxes/tech/pp119.htm Unknown AuthorMicrosoft: An Unprincipled, Rapacious CompanyThe Ethical Spectacle, April 1995,http://www.spectacle.orgUnknown AuthorThe Justice Department v Microsoft: The Evidence and theAnswersNew York Times,10/27/97, http://www.newyorktimes.orgUnknown AuthorMicrosoft offers a proposal to settle antitrust chargesWall Street Journal,3/24/00http://www.msnbc.com/news/386566.asp
Sheppard V Maxwell
On July 4, 1954, Marilyn Sheppard was tragically killed in her home in Bay Village, Ohio. Her body was found upstairs and the town mayor quickly notified the local police, Dr. Sheppard’s brother (also a doctor), and the neighbors. The local police contacted the coroner and Cleveland Police Department for assistance. The coroner confirmed Marilyn Sheppard’s death at the scene and examined Dr. Sheppard before taking him to his clinic for further evaluation.
Both Dr. Sheppard and the neighbors were thoroughly investigated by Cleveland Police Department authorities.Dr.Sheppard was later questioned while under sedation in a hospital bed without legal representation present.On July 7th during Marilyn Sheppard’s funeral, her family declined immediate questioning but on July 8th Dr.Shepparad received a subpoena and fully cooperated afterwards.The next day (July 9th), he provided detailed information about his wife’s murder to various individuals including the coroner (Dr.Gerber), police officers,and news reporters.This led to extensive media coverage.On July 20th, an editorial expressed concerns about Dr. Shepparad potentially avoiding punishment for murder due to personal connections and hired lawyers. Detective McArthur later revealed on July 26th that evidence at the crime scene had been tampered with. It was also discovered that Dr. Shepparad had engaged in an extramarital affair with Susan Hayes. On July 30th, he was arrested at his father’s home and promptly arraigned, being held for trial by a grand jury.
Dr. Samuel Sheppard, who was indicted for murder on August 17, immediately proclaimed his innocence the following day. The trial took place during the November General Elections and involved both the Chief Prosecutor, who was running as a candidate, and Judge Blythin seeking reelection.
Jury selection began on October 18, and the high-profile trial concluded after just nine weeks. Ultimately, Dr.Sheppard was found guilty of the murder.
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From Water To Land
From Water to Land (Revision)Abstract:The early tetrapods were the first vertebrates to actually walk the solid earth. They began their conquest of land in the Paleozoic era around 360 million years ago. The question many paleontologists have been asking for a long period of time is whether the anatomy for locomotion on land was developed in water for swimming purposes, or if it was adapted after the creatures became terrestrial. Recent findings of fossils indicate that the transformations of the aquatic creatures happened underwater in order to help them survive in the changing world. When looking for answers, they had to examine forearm, hip, wrist, finger, and other bones, as well as the lungs or gills of the early tetrapod fossils. This information is critical in understanding the history and the process of growth and change. It aids in learning about human evolution. Background:Tetrapods are creatures with four limbs, hips, shoulders, fingers, and toes, which developed sometime after lobe-finned fish, and before the first fully terrestrial vertebrates. The earliest tetrapod known is Acanthostega. It is also considered the most primitive tetrapod. It is very close to its fish ancestry, but still anatomically far from its terrestrial relatives. These creatures still lived in water, but they had a lot of the terrestrial tetrapod anatomical characteristics.
Introduction:Before tetrapods existed, all vertebrates were confined to living in aquatic habitats. The only animals that lived on land were arthropods. Through natural adaptations, the fish developed into amphibians. This colossal stage of change made necessary the evolution of new ways of breathing, locomotion, and reproduction. Paleontologists needed to understand how this transition took place. If the changes in anatomy of the fish developed on land, then they served the same purposes they serve today, such as walking. But what advantages would those same body parts give to the aquatic creatures still living in water? This is one of the questions the scientists are asking themselves. There have been a few hypotheses on this matter. The most recent one states that the transformations of the aquatic creatures happened underwater in order to help them survive. This time period is very difficult to study because there is a very small amount of fossils preserved. After all, this occurred approximately 350 million years ago; and since the first tetrapods lived in water, their remains were damaged as time went on.
Summary:. In 1940 Alfred Romer of Harvard offered a powerful scenario about the process of evolution of the fish into amphibians. He argued that the freshwater pools that the early tetrapods lived in were suffering seasonal droughts. He compared these early creatures to lungfish. Because of the draughts tetrapods evolved lungs and were able to breathe air when necessary. This happened over a long period of time. The lungs came to the rescue when the oxygen became scarce in water or when the ponds dried out. Romer also suggested that instead of digging burrows with their teeth, such as lungfish do in similar situations, tetrapods used their fins to struggle over the harsh land to the nearest pond. By the process of natural selection, fish with weak fins died along the way, but fish with strong ones lived to reproduce and pass on their genotype to their offspring. Gradually fins turned into limbs, which are much better for overland travel. At the same time, many other parts of the body, such as eyes, ears, and skin, changed to better cope with this new environment (Gardiner, 1998, p.659).
Romer’s theory was very controversial because there were a lot facts and findings that did not support it. The anatomy of the tetrapods teaches us a lot about their lifestyle. We notice that the radius and the ulna of the bones of the forearm are of different lengths. They are thinner at the wrist and thicker at the elbow. This implies that they would have been very poor at supporting the animal on land. The forearms were not adapted to give enough range of movement for walking action. This implies that the limbs first evolved in water and not on land. The next question is whether the hips developed to aid the creature in traveling distances on land or for some other reasons. According to Carl Zimmer, a walking animal’s hips have to be attached to its spine in order to support it against gravity. The hips of the early tetrapods did not have the attachment of strong ligaments. Their hips were loosely attached to their spines. If the tetrapods tried to walk, they probably would have flopped around defenseless on the ground. Therefore the rear limbs were not designed for locomotion on land. The creatures’ wrists were very weak, but surprisingly they had eight fully developed tetrapod fingers. These fingers were multijoined and sophisticated, but they were attached to the insubstantial wrist. They were virtually useless for helping the creatures walk on land. The early tetrapods had the body of a land animal but could not survive on land in theory. Another controversy was in the fact that the early tetrapods had gills; they breathed just like fish. This is a major implication that this animal lived in water and probably never left it. According to Kathleen McAuliffe, tetrapods probably lived in the swamps for at least 20 million years, after developing the anatomy, before moving to dry land. To summarize all of the findings stated above we must refer to the most logical explanation of all. Jenny Clarck proposed that fish must have evolved into tetrapods for life underwater. The lagoons were a new ecosystem in the Devonian period, but bacteria used up too much of oxygen. This was hard for the tetrapods that lived in water. Therefore they evolved lungs to help them survive. The limbs and hips aided the creatures to walk on the bottom of the wetlands. According to Zimmer the fish had to keep its fins in motion in order to remain motionless and unnoticed by the predators and the prey. The first tetrapods however, could grab rocks while waiting for prey to swim by. This shows that the tetrapods first evolved their limbs underwater, and later they started to use them on land, but for completely different reasons. Conclusion:As we have seen, the features of the early tetrapods indicate that they were excellent swimmers but unable to walk on land. The evidence shows that they were descended from a fish ancestor. This means that legs were not evolved for use underwater, and that they adapted for the task of locomotion much later. Evolution always adapts existing structures to perform new purposes, rather than creating new structures. The principle of evolution is sometimes called preadaptation. There is no foresight involved; simply the lucky coincidence that a feature evolved to do one thing may turn out later to do another thing even better.
ReferencesGardiner, David M., Torok, Maureen A., Mullen, Lina M., Bryant, Susan V. (September 1998). Evolution of vertebrate limbs: robust morphology and flexible development. American Zoologist, v38, n4 659 McAuliffe, Kathleen. (August, 1993). Retracing the footsteps of evolution. (fossil remains of an early tetrapod discovered in a museum) Omni v15, n10, 16 Zimmer, Carl. (June, 1995). Coming onto the land. Discover v16, n6 , 118