For those of us whose professions have become, or are becoming even more,
computer-dependent, the below decision will have far-reaching and long-term
consequences. If you want to find out more about what constitutes
'monopoly' behaviour under the United States Sherman Act, then go to:
http://www.usdoj.gov/atr

Microsoft broke antitrust law, judge finds
By John Solomon
Associated Press Writer

WASHINGTON (AP) -- Humbling a proud giant of the computer age, a federal
judge ruled Monday that Microsoft Corp. violated U.S. antitrust laws by
keeping ``an oppressive thumb'' on competitors during the race to link
Americans to the Internet.

In a sweeping verdict against the empire that Bill Gates built, U.S.
District Judge Thomas Penfield Jackson said Microsoft violated the Sherman
Act, the same law used to crush monopolies from Standard Oil to AT&T.

He concluded that the company was guilty -- as the federal government, 19
states and the District of Columbia had alleged in a case that began in May
1998 -- of ``unlawfully tying its Web browser'' to its Windows operating
system that dominates the computer market worldwide.

``Microsoft placed an oppressive thumb on the scale of competitive fortune,
thereby effectively guaranteeing its continued dominance,'' Jackson wrote.

The verdict affirms Jackson's previous ruling in November that the software
giant is a monopoly, one that illegally used its power to bully competitors
and stifle innovation, hurting consumers in the process.

The judge's ruling can be appealed, delaying its impact for years, and
Gates said the company would pursue that avenue.

While Microsoft ``did everything we could to settle this case, we believe
we have a strong case on appeal,'' Gates said. ``... This ruling turns on
its head the reality that consumers know: that our software has helped make
PCs accessible and more affordable to millions of Americans.''

Microsoft didn't lose all of the case: Jackson ruled that the government
failed to prove that Microsoft's exclusive marketing arrangements with
other companies ``constituted unlawful, exclusive dealing'' under federal
antitrust law.

Jackson's verdict opens the door for the federal government to seek drastic
penalties against Microsoft.

The options range from breaking up the company that made Gates a
billionaire to forcing it to share its proprietary software code with
competitors. Jackson also paved the way for states to seek penalties under
their own anticompetition laws.

``Microsoft maintained its monopoly power by anticompetitive means and
attempted to monopolize the Web browser market,'' Jackson said in a ruling
that caused a record-plunge in the Nasdaq market even before its release.
Microsoft stock dropped by more than $15 a share to close at $90.87.5,
costing Gates about $12.1 billion in paper losses.

The Justice Department vowed to press the case until consumers are rewarded.

``Microsoft has been held accountable for its illegal conduct by a court of
law,'' Attorney General Janet Reno said. ``Thanks to this ruling, consumers
who have been harmed can now look forward to benefits.''

Attorneys general for the states that joined the case called for strict
sanctions. Connecticut Attorney General Richard Blumenthal urged Jackson to
``adopt remedies that are as far-reaching and fundamental as Microsoft's
abuses of its monopoly.''

Reno's antitrust chief, Joel Klein, said he was still open to a settlement
but that it would have to redress the violations cited in Monday's ruling.

Microsoft Chief Executive Steve Ballmer also said the company would be open
to more negotiations but it ``would need to see an approporaite openness''
from the government.

``We've spent the past 25 years thinking of ourselves as a small aggressive
company playing catch up to industry giants even though at some point along
the way we became a large company,'' Ballmer said. ``... Our intense focus
on moving forward has at times been seen as threatening and our passion for
being the best has been misinterpreted. We can do better. But that doesn't
mean innovating any less or delivering any less value to consumers.''

In his ruling, Jackson wrote that ``Microsoft's anticompetitive actions
trammeled the competitive process through which the computer software
industry generally stimulates innovation and conduces to the optimum
benefit of consumers.''

He said Microsoft adopted ``aggressive measures'' with computer
manufacturers and Internet providers that ``successfully ostracized''
Navigator, a browser made by Microsoft rival Netscape Communications, in
favor of the company's Internet Explorer.

Substantial business was lost to competitors ``as a result of Microsoft's
decision to bundle Internet Explorer with Windows,'' Jackson wrote. The
bundling ``caused Navigator's usage share to drop substantially from 1995
to 1998, and that as a direct result Netscape suffered a severe drop in
revenues from lost advertisers, Web traffic and
purchases of server products.''

All the parties to the suit, including the states, tried to postpone a
ruling by working the last four months through a court-appointed mediator,
Judge Richard Posner. The talks collapsed over the weekend, prompting
Jackson to release his verdict.

Both sides in the case had reasons to settle. For Microsoft, the verdict is
expected to spur more consumer lawsuits. Microsoft already faces dozens of
class-action lawsuits seeking potentially billions of dollars in damages.
Private lawyers plan to use the ruling to bolster their contentions that
Microsoft abused its software monopoly to illegally
drive up prices of its Windows operating system.

``This is a manna from heaven for the private plaintiffs because it
basically should eliminate a lot of their need for proof,'' said Robert
Litan, a former Justice Department attorney who negotiated with Microsoft
in a related 1994 case.

For the government, an out-of-court settlement could have meant immediate
sanctions against Microsoft for its alleged anticompetitive acts. Such
relief, however, would be delayed with a lengthy legal battle now expected
to find its way through the U.S. Court of Appeals, where the case is likely
to be tied up for several years.

In addition, the U.S. attorney general's office will be under a new
administration by the time the case reaches the appellate court level.

The federal government has spent more than $7 million in its lawsuit and
used tens of thousands of pages of e-mail and other documents to portray
Microsoft as an industry bully. Justice Department lawyers said the company
illegally used its heft to undermine competing technologies and to
discourage support for its rivals.

On the Net: http://www.usdoj.gov/atr

http://www.microsoft.com

____________________________________________________________________

Mark David Major
Lecturer, University College London
Secretariat, International Space Syntax Steering Committee

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