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MICROSOFT MONOPOLY

United States of America v. Microsoft Corporation.

Since the early 1990s computer software giant Microsoft had been the target of federal investigations. In November 1999 a federal judge issued a "finding of facts" that stated the company had used its monopolistic market position to aggressively stifle competition and harm consumers. Judge Thomas Penfield Jackson of the U.S. District Court for the District of Columbia heard testimony between October 1998 and June 1999 on the civil antitrust allegations that Microsoft had violated the Sherman Antitrust Act (1890) and various state statutes. In what was only an initial, albeit important, stage in the judicial process, the ruling in United States of America v. Microsoft Corporation, laid out the factual basis for determining that Microsoft had violated antitrust laws.

Antitrust Laws

The Sherman Act was passed to dismantle monopolies of the giant steel companies and other huge corporations that emerged in the U.S. industrial revolution after the Civil War (1861-1865). Antitrust laws are designed to protect competition and benefit consumers with more and better products at lower prices. The Federal Trade Commission (FTC) and the Justice Department enforce antitrust laws.

Findings

In a 207-page ruling, Judge Jackson stated that under the control of CEO William Henry "Bill" Gates III, Microsoft was a monopoly, which is not in itself illegal, but it had improperly abused its power to the detriment of competitors and consumers. The charges against the company, which controlled more than 90 percent of the computer software market and had a market value of $470 billion by 1999, represented serious violations of law. The judge's finding of facts alleged that Microsoft constricted its web browser competitor Netscape's access to the market by bundling its own browser, Microsoft Internet Explorer, with the popular computer operating system Microsoft Windows. This meant that all computer systems that used Windows contained Microsoft's own browser, thereby making the Netscape browser technically unnecessary. Agreeing with the Justice Department's lead attorney Joel I. Klein, the Court also found that Microsoft used strong-arm tactics to include its browser on Apple Computers and bullied computer chip-maker Intel into staying out of the software market. In addition to its aggressive approach to competitors, Judge Jackson further noted that by bundling the Explorer browser with the Windows operating system, Microsoft harmed consumers. Jackson found that this practice slowed down the operating system, increased the likelihood of system failures, and made the software more susceptible to viruses. In its defense, Microsoft attorneys argued that the company's practices were competitive but not illegal.

Remedies

The next step in the judicial process will likely take place sometime during early 2000. In this stage, Judge Jackson will issue orders to Microsoft detailing how it must remedy the antitrust violations. Unless Gates negotiates a deal with the Justice Department, these remedies could range from breaking up Microsoft, as was done in the early 1980s with the Bell telephone company, to forcing it to expose the secret code behind the Windows operating system. In any case, Microsoft is likely to appeal. It is possible, if not likely, that the case may stay in the courts for the next several years and the fate of the company eventually will be decided by the Supreme Court.