Microsoft's Alleged Antitrust Tactics Exposed in Trial

Strategic Insights -

Garry Norris, an IBM manager, has testified that Microsoft offered an alliance to IBM in exchange for sacrificing its OS/2 operating system in favor of Windows, a proposal that was rejected by IBM. Norris further claimed that Microsoft threatened IBM and other computer makers to pressure them into not selling OS/2, a move that ultimately led to the commercial failure of the software. The testimony is part of the ongoing antitrust trial between the US government and Microsoft, with the government alleging that the company uses prices to punish its enemies and reward its friends, stifling competition in the operating system market.

Key Takeaways:

  • Microsoft allegedly offered an alliance to IBM in exchange for sacrificing its OS/2 operating system in favor of Windows, as testified by Garry Norris, an IBM manager.
  • Norris claimed that Microsoft threatened IBM and other computer makers, such as Compaq, to pressure them into not selling OS/2, leading to its commercial failure.
  • The government alleges that Microsoft uses prices to punish its enemies and reward its friends, stifling competition in the operating system market.
  • Compaq received lower prices from Microsoft, allegedly due to volume discounts and contributions to Windows 95 development.
  • IBM's costs increased from $40 million to $220 million after Microsoft raised the price of Windows 95 to about $46.
  • The exact price that Microsoft charges for Windows is one of the industry's most closely guarded secrets.
  • The US government's antitrust case against Microsoft alleges that the company engages in anticompetitive practices, including price fixing.

Statistics:

  • IBM's costs for Windows increased from $40 million to $220 million after Microsoft raised the price.
  • Microsoft wanted about $46 for Windows 95, a significant increase from the previous price of $9.
  • Compaq received lower prices from Microsoft, allegedly due to volume discounts and other factors.
  • The antitrust trial has been ongoing for several weeks and is expected to continue for some time.

Sources:

  • Garry Norris, IBM manager and government witness
  • Rick Pepperman, Microsoft lawyer
  • Compaq Computer Corp., a computer manufacturer that allegedly received lower prices from Microsoft.
  • US government, plaintiff in the antitrust case against Microsoft.