Microsoft's browser problems not over

Struggles continue this week for Microsoft, which is continuing its legal battles with other browser companies in Europe. Specifically, Opera is contesting the most recent solutions that both Microsoft and the EU have suggested in the browser market overseas. Opera believes that Microsoft's proposed solution is not a viable solution to the anti competitive nature that it holds over the market.

This lawsuit has some very interesting economic implications. Opera is alleging that Microsoft's solution would do little to break the strong market control they have built due to their bundling strategy. Although they would no longer be able to bundle Internet Explorer (IE) with their operating systems, they would still seperately sell IE as a program available for the public. Due to brand loyalty, Microsoft may have still have an advantage over other, smaller browser companies. As well as this, Microsoft has raised the cost of entering the market, therefore creating a bigger barrier to entry. The other companies would have to find a way to distribute their program to the public, and this distribution would have a large cost. Because Microsoft is a very large corporation, they will have a much easier time distributing their browser, and this would constitute a competitive advantage over the smaller companies.

As the lawsuits continue, it is clear that Opera and the other smaller companies will try have Microsoft's market power lessened, allowing them to fairly compete in the market. One idea is to allow internet users to choose what browser they wish to use when they first connect to the internet. This idea would greatly decrease the barrier to entry, and would allow more firms in the market to compete for consumers. Along with the benefits for the firms, the expanded choice would increase the supply in the market, and the market would move more toward PE, and would also increase consumer surplus.

http://news.cnet.com/8301-13860_3-10262913-56.html

Tim Booth