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Despite its wide acceptance in economics, the fundamental tenet of the theory of the firm is not without its critics. Questions related to the nature and role of the firm, its objectives, responsibilities and behavior have fueled much of the recent debate. Today, firms are being evaluated and scrutinized not merely on their economic performance, but also by the ethical standards they uphold. The case brought against Microsoft is an example of the tangled web that characterizes the economic, legal and ethical dimensions of business operations. This paper shows that as an economic entity, Microsoft employed strategies that were consistent with its long‐run objective of profit maximization. In so doing, however, Microsoft violated anti‐trust laws and was charged with illegal conduct. Despite the court ruling, economic and legal justifications continue to be a subject of debate amongst the different entities involved in this case. More so when ethical implications are considered, consensus becomes even harder to reach due to the subjective nature of the judgement.

With more twists and turns and more ups and downs than a roller coaster ride, Microsoft’s anti‐trust case rumbles on. The latest turn? After being told that it does not have to break into two after all (a perceived victory snatched from the jaws of defeat), the software giant is now in trouble with the courts for failing to carry out the necessary amendments to its software fast enough. The actions undertaken by Microsoft are not unique – monopolies, tying agreements and exclusive dealings have come under scrutiny for years. However, the length of the dispute, the magnitude of the company and the implication for the future is, in Microsoft’s case, unprecedented.