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The Wintel Alliance: Robber Barons Redux?


Already notorious within the high-tech industry for its bullying tactics, Microsoft came to the attention of government regulators when a small software company accused the software giant of unfair competitive practices.

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The emergence of computer hardware and software as the basis of the information age has led to whole new vistas of monopolistic opportunity. Though IBMstarted out with an early lead, having developed some of the earliest and most powerful computers in the 1960s and '70s, Big Blue's behemoth stature was soon overshadowed by the likes of an upstart software company and a memory-chip maker who focused on the personal computer boom. The so-called "Wintel standard" that gained popularity in the 1980s cemented the alliance between Intel Corporation's processors—which are the building blocks for the guts of personal computers—and Windows, the operating system developed by Microsoft Corporation that tells the processor what to do. By the mid-1990s, Intel's chips and Microsoft's Windows were installed on 80% of the world's computers, and both companies were enjoying tremendous success in the market and with their stockholders.

Competitors, however, decry the success of these companies as evidence of a monopoly. In an antitrust suit filed in June 1998, the Justice Department alleges that Intel uses its market-dominant position to gain preferential treatment from computer manufacturers and thereby exclude competitors. Intel's trial, now slated to start in February 1999, is more focused than the broad-ranging probe of Wintel partner Microsoft.

Already notorious within the high-tech industry for its bullying tactics, Microsoft soon came to the attention of government regulators when a small software company accused the software giant of unfair competitive practices. Netscape Communications Corp. had created an Internet browser for the newly emerging World Wide Web. At the time, Microsoft had no such product in its repertoire, but could see the burgeoning popularity of the Internet and quickly introduced its own browser. When Microsoft began bundling its browser in with its Windows software, which people have to buy to run their computers, they were effectively giving away the product. Netscape charged that the tactic amounted to an unfair advantage, and the complaints led to an investigation, which eventually led to the antitrust suit filed by the U.S. Department of Justice and 20 states on May 20, 1998. The suit began in September, and is likely to continue for months.


Information Please® Database, © 2007 Pearson Education, Inc. All rights reserved.

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