Ni-nice - -
Two antitrust actions were started by the U.S. Department of Justice
(DOJ) against Microsoft in the 1990s, one in 1994 involving
anticompetitive terms in its software developer licensing and a second
in 1998 over the requirements that personal computer (PC)
manufacturers ship Internet Explorer with Windows 95. The 1998
lawsuit was joined by 20 states when it was filed.
The 1994 suit was solved with a Consent Agreement between Microsoft
and the government.
The 1998 antitrust suit resulted in a District Court ruling against
Microsoft on a broad basis and included District Court Judge Thomas
Penfield Jackson’s ruling in April 2000 that Microsoft stifled
competition by controlling what software was shipped with its
operating system. Appeal of that decision went to the Supreme Court
in September 2000 – but the High Court sends the case to the U.S.
Court of Appeals.
The Federal Appeals Court in June 2001, reversed portions of Judge
Jackson’s decision, including the proposed breakup of Microsoft into
two companies. They questioned the partiality of Judge Jackson, given
his public criticism of Microsoft and assigned the case to a new
District Court judge for rehearing.
Money/CNN
U.S. Court of Appeals - - "U.S. vs. Microsoft Decision" (June 28,
2001)
http://money.cnn.com/2001/06/28/microsoft_file/decision.pdf
Microsoft again asked the Supreme Court to hear the case in August
2001. Instead, the case went to Judge Colleen Kollar-Kotelly, who
pushed the company and DOJ into settlement talks. A change in legal
staff at DOJ as the Bush Administration came to office in 2001
resulted in a decision by Charles James, head of the DOJ Antitrust
Division dropping the breakup of the company into two units and
dropping the pursuit of illegal “tying” of Internet Explorer to the
Windows operating system (in order to kill the main competitor,
Netscape Navigator.)
The final agreement with DOJ loosened Microsoft’s licensing agreements
for PC manufacturers; requires disclosure of interfaces (APIs) and
communications protocols. Judge Kollar-Kotelly used that as a basis
for settlement of the case:
U.S. vs. Microsoft
"Final Judgment" (Nov. 12, 2002)
http://www.dcd.uscourts.gov/98-1232cq.pdf
Separately, the European Union (EU) Commission is in the midst of
antitrust action against Microsoft this week over server software
after two years of deliberation. The EU process followed a complaint
in December 1998 from Sun Microsystems that Microsoft violated EU
antitrust law by discriminatory licensing terms and also by refusing
to supply key technical information about the operating system to Sun.
The EU also started a second investigation regarding Windows 2000
software in February 2000; then a third action regarding what it
considered illegal bundling of Window Media Player in the operating
system. A decision is expected shortly, according to PC World
magazine:
PCWorld.com
"Decision Nears in Microsoft’s European Antitrust Case" (Jan. 22,
2003)
http://www.pcworld.com/news/article/0,aid,108909,00.asp
Competitors continue their attack in Europe, with a complaint being
filed in February by the Computer and Communications Industry
Association in February with the EU. The allegations are similar to
previous issues regarding use of the operating system to crush
competitors, this time in the e-mail, instant messaging, handheld
computer, digital audio and video markets:
San Jose Mercury-News
"Microsoft Rivals File Antitrust Complaint in Europe" (Feb. 11, 2003)
http://www.siliconvalley.com/mld/siliconvalley/business/special_packages/ms_antitrust/5160000.htm
So, there were four court cases regarding two antitrust cases in the
U.S. (not counting hearings at the Supreme Court level) and three
European Union complaints that are still alive. In each case the
arguments of each side varied and proposed remedies changed, most
notably with the changes in the DOJ Antitrust Division from the
Clinton to the Bush administrations.
1994 ARGUMENTS
---------------
The early antitrust complaints were taken over by the Department of
Justice after a pair of Federal Trade Commission inquiries regarding
licensing terms for personal computer operating systems. The DOJ
complaint was that:
* Microsoft prices Windows on a per processor basis, constituting a
“tax” paid to Microsoft even when a customer wants no software
pre-installed (or a competitor’s software).
* the company used multi-year agreements with hardware manufacturers
to block competitors from the OS market.
* Microsoft’s use of non-disclosure agreements or NDAs blocked
software vendors from working with the company’s competitors.
U.S. vs. Microsoft
http://www.usdoj.gov/atr/cases/f0000/0046.htm
Microsoft contended that its per-computer pricing practices lowered
the cost to consumers. In addition, it blamed the failure of
competitors to make inroads in the application software market to
their technical and marketing weaknesses, not to Microsoft’s promotion
of bundled applications via PC manufacturers.
Nonetheless the out-of-court settlement, approved by Judge Thomas
Penfeld Jackson stopped any per-computer licenses; multi-year
licenses; and Microsoft’s requirement that other software be required.
It also restricted the terms of NDAs until the commercial release of
a product.
"U.S. Vs. Microsoft Final Judgment, Civil Action 94-1564"
http://www.usdoj.gov/atr/cases/f0000/0047.htm
1998 ARGUMENTS
---------------
In 1998 the battle over antitrust resumed because of its integration
of Internet Explorer into Windows 95. One of the prime arguments was
that Microsoft had violated the 1994 Consent Agreement by requiring
the browser be shipped with Windows.
In addition, Netscape and DOJ argued that Microsoft held a monopoly in
the operating system market and had used it illegally to crush
competition in the Internet browser market.
Microsoft, using arguments that appear again in later court
proceedings, contends that PC manufacturers can ship Netscape if they
want. However, Jeff Raikes, Group Vice-President for Sales &
Marketing, contends that Microsoft’s control of the user experience is
delivering the consistency that customer desire in this “Newshour with
Jim Leher” interview and that it was a superior browser that gave
Microsoft its market share:
PBS
"A Matter of Antitrust" (May 18, 1998)
http://www.pbs.org/newshour/bb/law/jan-june98/microsoft_5-18.html
Microsoft also argues that attacks on the structure of its software
bundling and development will stifle innovation and are un-economic
for the software industry and consumers - - so the government is
wasting money on antitrust prosecution. From this period onward,
Microsoft worked to marshall the support of economists who have
attacked theories behind antitrust legislation:
Ludwig Von Mises Institute
"Mises.org on Microsoft"
http://www.mises.org/microsoft.asp
2001 APPEALS COURT ARGUMENTS
-----------------------------
The U.S. Court of Appeals was asked to review Judge Jackson’s decision
that contended:
1. Microsoft "had maintained a monopoly in the market for
Intel-compatible PC operating systems" and illegally tied Windows to
Internet Explorer.
2. The remedy should be splitting the company into two independent
businesses – one for operating systems and one for applications.
Judge Jackson also put other restrictions on Microsoft, including the
injunction against forced bundling by PC manufacturers.
Microsoft’s appeal challenged the legal conclusions and penalties,
arguing that:
* the District Court failed to give Microsoft a chance to dispute
facts in an evidence hearing.
* that Judge Jackson made ethical violations by making public
comments on the case while it was still pending, destroying his
appearance of impartiality.
* definition of the computer operating system market as
“Intel-compatible PC operating systems” (where the company had a 95%
share) is too narrow a definition for the market because it excludes
MacIntosh operating systems and middleware.
* there are no barriers to entry to the PC operating system market.
* though Internet Explorer was in the operating system, there was
nothing that prevented Netscape from installing the competitive
Navigator browser.
* in a confusing contradiction to public statements, Microsoft argues
that browser and operating system code are NOT co-mingled.
* exclusive licensing deals with PC manufacturers which included only
Internet Explorer are not anti-competitive because they don’t block
access to the market through other channels.
In addition, Microsoft and Chairman Bill Gates argued outside court
that any of the restrictions proposed by DOJ would stifle innovation.
The company also contended that Internet Explorer could not be
unbundled from the operating system (OS) because of tight
inter-operation, despite its arguments in court.
2002 DISTRICT COURT ARGUMENTS
------------------------------
Microsoft contends that the Justice Department remedies being sought
(unbundling of Internet Explorer from the OS) are “outside the scope
of the issues in the case.” However, much of the arguing in the legal
briefs filed by both sides in September 2001 were over how much time
should be scheduled for reviewing evidence, with DOJ wanting a brief
period. Microsoft argued that if DOJ remedies were too extensive a
“several months of intensive discovery will be required.”
Microsoft argued for approval of its agreement with DOJ and tried hard
to avoid the request of the states that Microsoft be required to sell
a stripped down version of the OS, arguing that it was confiscation of
its intellectual property and "might force it to stop selling Windows
altogether."
Forbes Magazine
“Colleen Kollar-Kotelly: You Be The Judge” (June 20, 2002)
http://www.forbes.com/2002/06/20/0620topnews.html
EUROPEAN UNION ARGUMENTS
-------------------------
Competitors allege that Microsoft has not disclosed a myriad of
technical details, including source code and information about secure
network communications.
The EU also alleges that Microsoft used its monopoly power with
Windows to force adoption of its proprietary Windows Media Player for
audio and video.
In addition, Microsoft requires use of all Microsoft-branded software
when running servers/desktops/portables and other devices - - and the
company’s refusal to make information about interfaces between those
devices available is part of its anti-competitive strategy.
From Microsoft, the counter-arguments have been that:
1. all areas of the EU complaints were covered by the November, 2002
settlement with the U.S. Justice Department – and that Microsoft has
offered further concessions to meet EU rules.
2. the existence of interoperable features between operating systems
on desktop/portables/services is irrelevant to competition law, as
companies can still use Windows and non-Windows systems easily on
networks.
3. competitors are simply seeking to copy work done by Microsoft.
A very helpful site in presenting the history of the antitrust cases
in the U.S. is at:
U.S. Department of Justice Antitrust Division
“United States vs. Microsoft”
http://www.usdoj.gov/atr/cases/ms_index.htm
Google search strategy:
Microsoft + “Justice Department” + antitrust
Microsoft + decision + “Kollar-Kotelly” + antitrust
Microsoft + "Thomas Penfeld Jackson" + decision
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Best regards,
Omnivorous-GA |
