Introduction

Microsoft has repeatedly been accused of making market allocation proposals to its competitors. It has also been criticized for using broad range of other anticompetitive and unlawful tactics to eliminate potential rivals, including tying, predatory product design, and intentional deception. Microsoft owns several monopoly products, including its Windows operating system and Office suite of productivity applications.

These monopolies are extremely lucrative , Microsoft makes more than 60 Billion USD annually, largely from Windows and Office alone. It boasts of profit margins of 77% and 65% respectively for these two monopoly products. Over the years, Microsoft has carefully cultivated and expanded the barriers to entry protecting these monopolies .Although Microsoft has paid many multimillion-dollar settlements for its antitrust violations over the years, these settlements have proven to be a very small price for such an extremely large ongoing revenue stream.

Microsoft’s History of Anticompetitive Conduct

Most consumers prefer operating systems for which a large number of applications have already been written & most developers prefer to write for operating systems that already have a substantial consumer base. This “chicken-and-egg” situation ensures that applications will continue to be written for the already dominant Windows, which in turn ensures that consumers will continue to prefer it over other operating systems. Microsoft is said to have originally developed its Office monopoly for the express purpose of strengthening the applications barrier that protect the Windows.

Microsoft very quickly realized that in order to stay viable in terms of competition merely possessing Office and other applications won’t be sufficient. Microsoft’s nightmare was “Middleware Threat”. Middleware products are software products that, like Windows, expose application programming interfaces (APIs) that software developers can use in writing other applications. Microsoft since the outset therefore systematically crushed eliminated all entities that posed middleware threat to it’s staggering business including Netscape’s web browser and WordPerfect to name a few.

This initial interoperability came to be known as part of Microsoft’s now-classic

“embrace, extend, and extinguish” strategy, which Microsoft has subsequently and successfully employed in many other product areas.

This strategy has three phases: First, Microsoft “embraces” a competing product by developing software or implementing standards that are compatible with the competing product. After that Microsoft extends interoperability features with windows and once the competing product becomes dependant on the windows platform and it becomes an unannounced standard , Microsoft pull the plug in the extinguish phase by discontinuing support and compatibility features.