Microsoft Plays Hardball: The Use of Exclusionary Pricing and Technical Incompatibility to Maintain Monopoly Power in Markets for Operating System Software

Baseman, Kenneth C., Warren-Boulton, Frederick R. and Woroch, Glenn A., "Microsoft Plays Hardball: The Use of Exclusionary Pricing and Technical Incompatibility to Maintain Monopoly Power in Markets for Operating System Software" . Antitrust Bulletin, Vol. 40, No. 2, Pp. 265-315, Summer 1995 Available at SSRN:

Abstract:

This article examines Microsoft's licensing practices for its MS-DOS and Microsoft Windows operating system software. Our main focus is on Microsoft's use of CPU (central processing unit, or per-processor) licenses, under which an original equipment manufacturer (OEM) of personal computers pays a royalty for each machine it ships instead of for each unit of MS-DOS installed. We also examine Microsoft's practice of requiring in these licenses a minimum number of personal computers (PCs) on which MS-DOS can be installed, Microsoft's tying of Microsoft Windows and technical support information to the sale of MS-DOS, and Microsoft's attempts to induce technical incompatibility between MS-DOS and its main competitor, DR-DOS. Finally, we turn to the proposed consent decree between Microsoft and the Department of Justice.

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