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"Google has been forced by regulators in the US to agree to legally binding changes to the way it presents some search results and runs its search advertising following nearly two years of investigation."

This is the hottest selling news in the tech world today. Google's exoneration comes as no surprise. What does this verdict mean first of all?

To put it simply, Google has now legally agreed to license "essential" patents to other mobile device rivals like Apple, RIM, Microsoft as well as include "snippets copied from other sites" in its search result summaries. As pointed out by analysts, the issue regarding patents was raised, following Google's acquisition of Motorola for a whopping $12.4bn in 2012.

However, Google's notorious nemesis Microsoft has expressed its displeasure of the verdict. Microsoft, the mouthpiece for all of Google's rivals, has stated that the "search company has been highlighting its own services on its influential results page while burying the links to competing sites". That's some fancy volley of words coming from a Corp that was in the a legal loop 15 years ago for its antitrust acts itself! Well what are both these tech giants attempting to do? Playing "the-joke's-on whom" game, eh?

In the wake of this happening, we look at some famous cases of US corporations with a not-so-happy an ending. The heart of the issue in almost all the the cases has been that no single firm has a choker's hold in the market. What lessons do these cases hint at - industrial jealousy or genuine concern for conducting a healthy business for consumer's sake?

We'll come to that. But first things first. What is anti-trust law?

The US federal and state government's devised the Anti-trust laws to regulate the monopolistic tendencies of firms so that consumers demands are met fairly, as all business get an equal performance opportunity. For this, the law encourages agreements, contracts and mergers between various competing parties. The two premier law enforcement agencies that supervise this functionality are the Anti-Trust Division of the Justice Department and the Federal Trade Commission.

Here is a medley of US history's greatest antitrust cases.

1. Standard Oil

Rockefeller fortunes tumbled famously from 1906-1911 following the lawsuit squabbles that broke up his vast enterprise into many small businesses.

The case is unprecedented in history for two reasons: for one it broke up the monopoly of a single large thriving Big Business into 34 competing companies. The other reason being, the case introduced a major law amendment. While the case was prosecuted according to the Sherman Act but it also led to the drafting of the much improved version of antitrust laws in those days- Clayton Anti-Trust Act.

Founded in 1870, Standard Oil under Rockefeller set out to sell kerosene at 6 cents/gallon and by 1890's they had ventured into bringing down petroleum prices down by almost 61%. This had put out many existing businesses from the competition.

Company chief A.C. Bedford served as chairman of the War Services Committee, an agency created to mobilize the nation's supplies of gasoline and diesel fuel for military use during World War I. After the war, federal control never retreated, transforming what economist Dominick Armentano has called "a virtual textbook example of a free and competitive market" into "what had previously been unobtainable: a government sanctioned cartel in oil." The legacies of this transformation include higher prices for consumers and the "energy crisis" of the 1970s. Deregulation in the 1980s finally restored some measure of competition to the industry. Moreover the shipping services offered to railroads earned them exclusive rebates, that were kept secret. The rival claimants zeroed-in all these acts to file a patent lawsuit which was approved by the government.

Lesson: Following the outbreak of the WWI, Standard Oil's chief A.C Bedford capitalized on the opportunity to expand the business despite federal control. He sat on the War Services Committee that mobilized supplies of gas and diesel to the Forces. Economists call this a transformation of a "virtual textbook example of free and competitive market... to a goverment sanctioned cartel in oil". The major consequence of this case was the energy crisis of 1970s and price rise. Only a deregulation of the industry set the competition back in motion.

2. ALCOA

This is a rather sad case of a company that was too efficient and a "natural monopoly" in the aluminium sector. It has the exclusive patents over all the base materials  involved in the manufacture of aluminum in America. The progress  went on unhindered until the federal agencies filed a case in 1937 for alleged violation of 100 antitrust laws. The paradox till date remains that the firm was too efficient to meet consumer demands thus becoming a monopoly. Though it never wittered away like Standard Oil, it lost out the market to others like Kaiser and Reynolds, which eventually took over Alcoa.

Lesson: The story of Alcoa and Alcan, its subsidiary company shows that the government acted against those efficiently running firms that unintentionally drove the price market to an uncompetitive scale. Hence no Business is really outside the purview of federal antitrust codes, be it big firms or Small Business.

3. AT&T

This telecom giant, from its inception championed protective policies against unfair competition. What worked for AT&T for a long time was that other competing firms were under legal prohibitions to enter the telephone service market. This gave them a natural lead in terms of service providing as well as equipment supply in the domestic market.

In 1974 Attorney General William Saxbe filed a lawsuit that saw the break up of the company into seven minor ones called "Baby Bells". What most people do not know is that AT&T's split was a consensual move for deregulating th economy, based on the public utility model. Secondly, AT&T benefited from this, as it could now venture into non-regulated businesses such as data processing.

Lesson: Patterned like Standard oil case, AT&T's break up is a comment on federal actions- they allow firms to expand naturally first but later  disapproves of its actions at the cost of innovation in goods and services. The future of anti trust law enforcement is in serious question here.

4. Kodak

Kodak has shaped the way the world captured its memories through pictures. At one point it controlled almost 96% of the film and camera market. However the US watchdog agencies, filed two lawsuits against the firm for "tying together the film and its finished product for a fee" - in 1921 and 1954. This was again a violation of the Sherman Act. While the first one prohibited Kodak from selling films under its own label, the second decree forced the firm to license its color finishing technology to other parties. With the enforcement of new WTO regulations, these two laws were done away with in 1994.

Lesson: It speaks again for the government's supposed paranoia against innovative players who can rule the roost single-handedly thereby driving a hole into the State coffers.

5. Microsoft

Coming onto the most famous and well read case of the previous decade, Microsoft came under the FTC scanner in 1991 over allegedly abusing the Computer OS market by bundling it together with IE browser software. This is said to have closed in the market for other web browsers like Netscape Navigator and Opera, that were slow to be downloaded as compared to the Explorer. Microsoft was also accused of manipulating its API interface.

The Court verdict was against Microsoft. In one of the proceedings it was ordered that following its "tying" activities, the firm should be broken up into two separate parts- one that would produce OS and the other the software. But later it was stalled following a settlement draft by Microsoft, agreeing to allow other manufacturers to "adopt non-Microsoft software". This took care of the major accusation of restricting licenses with OEMs (original equipment manufacturers).

Lesson: The verdict on the Microsoft case while spelt out the government's interventionist role into the technology sector as well. Jean-Louise Gassee, CEO of Be Inc. opines that Microsoft was really earning no returns with its browser but by "tying" the OS and software it was responding to "consumer expectation to have a browser packaged with the OS... true anti-competitive clout was in the rebates it offered to OEMs" that restricted the market purview considerably.


Do share with us your thoughts about the existing laws and whether the real flaws lie in the mechanism of law or simply its enforcement. You can leave your reply in the section below.

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