U.S. Timeline - The 2000s
The War on Terrorism
2000 - DetailApril 3, 2000 - The ruling in the case of the United States versus Microsoft states that the company did violate anti-trust laws by diminishing the capability of its rivals to compete.
The ruling on April 3, 2000, was neither the beginning nor end of the anti-trust case brought against Microsoft by the federal government. It began when the Federal Trade Commission launched an investigation in June 1990 against the possible software monopoly by Microsoft and IBM. Within three years, the probe was transferred to the Justice Department; one year later, Microsoft agreed to a consent decree that would prohibit the company from using their operating system to harm competition.
This action was not the end of the Justice Department's probing into Microsoft's potential competitive advantage, as by August of 1997, they began to look into whether their investment in Apple and other companies would be anti-competitive. Two months after that probe began, the Justice Department began to levy a $1 million per day fine against Microsoft for demanding the bundling of their browser with the Windows 95 operating system. After much legal wrangling over whether the fine and subsequent rulings were appropriate, the Justice Department and twenty state Attorney Generals, on May 18, 1998, filed an anti-trust suit against Microsoft for abusing its market power.
The ruling of April 3, 2000 was followed by a penalty phase, of which a breakup of Microsoft into two separate companies was initially ruled. By June of 2001, a federal appeals court overruled the breakup. A proposed settlement was negotiated, requiring Microsoft to share its application programming interfaces with third party companies.
Findings of Fact/Effect on Consumers
Source: Thomas Penfield Jackson U.S. District Judge, Date: November 5, 1999 Findings of Fact: UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, UNITED STATES OF AMERICA, Plaintiff vs. MICROSOFT CORPORATION, Defendant.Civil Action No. 98-1232 (TPJ).
FINDINGS OF FACT
These consolidated civil antitrust actions alleging violations of the Sherman Act, 1 and 2, and various state statutes by the defendant Microsoft Corporation, were tried to the Court, sitting without a jury, between October 19, 1998, and June 24, 1999. The Court has considered the record evidence submitted by the parties, made determinations as to its relevancy and materiality, assessed the credibility of the testimony of the witnesses, both written and oral, and ascertained for its purposes the probative significance of the documentary and visual evidence presented. Upon the record before the Court as of July 28, 1999, at the close of the admission of evidence, pursuant to FED. R. CIV. P. 52(a), the Court finds the following facts to have been proved by a preponderance of the evidence. The Court shall state the conclusions of law to be drawn therefrom in a separate Memorandum and Order to be filed in due course.
SECTION VII - THE EFFECT ON CONSUMERS OF MICROSOFT'S EFFORTS TO PROTECT THE APPLICATIONS BARRIER TO ENTRY
408. The debut of Internet Explorer and its rapid improvement gave Netscape an incentive to improve Navigator's quality at a competitive rate. The inclusion of Internet Explorer with Windows at no separate charge increased general familiarity with the Internet and reduced the cost to the public of gaining access to it, at least in part because it compelled Netscape to stop charging for Navigator. These actions thus contributed to improving the quality of Web browsing software, lowering its cost, and increasing its availability, thereby benefitting consumers.
409. To the detriment of consumers, however, Microsoft has done much more than develop innovative browsing software of commendable quality and offer it bundled with Windows at no additional charge. As has been shown, Microsoft also engaged in a concerted series of actions designed to protect the applications barrier to entry, and hence its monopoly power, from a variety of middleware threats, including Netscape's Web browser and Sun's implementation of Java. Many of these actions have harmed consumers in ways that are immediate and easily discernible. They have also caused less direct, but nevertheless serious and far-reaching, consumer harm by distorting competition.
410. By refusing to offer those OEMs who requested it a version of Windows without Web browsing software, and by preventing OEMs from removing Internet Explorer or even the most obvious means of invoking it prior to shipment, Microsoft forced OEMs to ignore consumer demand for a browserless version of Windows. The same actions forced OEMs either to ignore consumer preferences for Navigator or to give them a Hobson's choice of both browser products at the cost of increased confusion, degraded system performance, and restricted memory. By ensuring that Internet Explorer would launch in certain circumstances in Windows 98 even if Navigator were set as the default, and even if the consumer had removed all conspicuous means of invoking Internet Explorer, Microsoft created confusion and frustration for consumers, and increased technical support costs for business customers. Those Windows purchasers who did not want browsing software businesses, or parents and teachers, for example, concerned with the potential for irresponsible Web browsing on PC systems not only had to undertake the effort necessary to remove the visible means of invoking Internet Explorer and then contend with the fact that Internet Explorer would nevertheless launch in certain cases; they also had to (assuming they needed new, non-browsing features not available in earlier versions of Windows) content themselves with a PC system that ran slower and provided less available memory than if the newest version of Windows came without browsing software.
By constraining the freedom of OEMs to implement certain software programs in the Windows boot sequence, Microsoft foreclosed an opportunity for OEMs to make Windows PC systems less confusing and more user-friendly, as consumers desired. By taking the actions listed above, and by enticing firms into exclusivity arrangements with valuable inducements that only Microsoft could offer and that the firms reasonably believed they could not do without, Microsoft forced those consumers who otherwise would have elected Navigator as their browser to either pay a substantial price (in the forms of downloading, installation, confusion, degraded system performance, and diminished memory capacity) or content themselves with Internet Explorer.
Finally, by pressuring Intel to drop the development of platform-level NSP software, and otherwise to cut back on its software development efforts, Microsoft deprived consumers of software innovation that they very well may have found valuable, had the innovation been allowed to reach the marketplace. None of these actions had pro-competitive justifications.
411. Many of the tactics that Microsoft has employed have also harmed consumers indirectly by unjustifiably distorting competition. The actions that Microsoft took against Navigator hobbled a form of innovation that had shown the potential to depress the applications barrier to entry sufficiently to enable other firms to compete effectively against Microsoft in the market for Intel-compatible PC operating systems. That competition would have conduced to consumer choice and nurtured innovation. The campaign against Navigator also retarded widespread acceptance of Sun's Java implementation.
This campaign, together with actions that Microsoft took with the sole purpose of making it difficult for developers to write Java applications with technologies that would allow them to be ported between Windows and other platforms, impeded another form of innovation that bore the potential to diminish the applications barrier to entry. There is insufficient evidence to find that, absent Microsoft's actions, Navigator and Java already would have ignited genuine competition in the market for Intel-compatible PC operating systems. It is clear, however, that Microsoft has retarded, and perhaps altogether extinguished, the process by which these two middleware technologies could have facilitated the introduction of competition into an important market.
412. Most harmful of all is the message that Microsoft's actions have conveyed to every enterprise with the potential to innovate in the computer industry. Through its conduct toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products. Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest.
Photo above: Microsoft Headquarters, Source: Wikipedia Commons. Other info sources: Wired News Reports, 11-4-2002, U.S. vs. Microsoft Timeline.