U.S. v. Microsoft: Lessons Learned and Issues Raised

U.S. v. Microsoft: Lessons Learned and Issues Raised

Description

On May 18, 1998, the U.S. Department of Justice, 20 individual states, and the District of Columbia filed suit against the Microsoft Corporation claiming that Microsoft had monopolized the market for personal computer (“PC”) operating systems (“OS”s) and had used its monopoly to engage in a wider range of antitrust violations. The case was tried in Federal District Court from October 19, 1998, through June 24, 1999. The court reached its findings regarding the facts of the case on November 5, 1999, and its legal conclusions on April 3, 2000. Microsoft’s appeal to the Circuit Court of Appeals for the District of Columbia was decided on June 28, 2001. The appellate court affirmed the monopolization claim, reversed other conclusions by the District Court, and remanded the case to the District Court to find an appropriate remedy. Following extensive settlement discussion among the various parties, the Department of Justice (DOJ) and Microsoft reached a settlement agreement. Nine states opted not to join the settlement and proposed a different remedy. A 32-day remedy trial was held, and on November 1, 2002, the District Court issued a remedy ruling, which was ultimately upheld by the Court of Appeals. Microsoft’s antitrust problems did not end with the Government’s case. Microsoft was sued privately by multiple parties and in most cases settled for substantial sums. After its own investigation, the European Commission (EC) concluded that Microsoft’s bundling of its operating system with its “player” (which allows a user to stream audio or video content from the web) violated Article 82 of the European Commission Treaty. The EC ordered Microsoft to pay a substantial fine and to put onto the market a second version of its current operating system, Windows XP, without a player. Microsoft has appealed the EC’s ruling to the Court of First Instance, and (absent a settlement) could take that appeal further to the European Court of Justice. These is no doubt that, from the public’s perspective U.S. v. Microsoft was the antitrust case of the 1990s and perhaps for decades before that. The investigation, the trial, and its aftermath received wide press coverage throughout. A number of the major actors in the drama became household names, as much as a result of the public relations battle among the parties as of the litigation itself. There remains however, substantial debate as to the ultimate legal import of the case. In this essay, we will explain why we believe the case was indeed a significant antitrust case that has important implications for antitrust enforcement in the 21st Century. U.S. v. Microsoft not only proved that the Government could litigate a complex case in a dynamic, high technology industry in a timely fashion, but also reinvigorated Section 2 of the Sherman Act. The case provided a foundation for antitrust enforcement in the “new economy.”

Source Publication

Antitrust Stories

Source Editors/Authors

Eleanor M. Fox, Daniel A. Crane

Publication Date

2007

U.S. v. Microsoft: Lessons Learned and Issues Raised

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