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The Microsoft Antitrust Cases

The Microsoft Antitrust Cases: Competition Policy for the Twenty-first Century

Andrew I. Gavil
Harry First
Copyright Date: 2014
Published by: MIT Press
Pages: 464
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  • Book Info
    The Microsoft Antitrust Cases
    Book Description:

    For more than two decades, the U.S. Department of Justice, various states, the European Commission, and many private litigants pursued antitrust actions against the tech giant Microsoft. In investigating and prosecuting Microsoft, federal and state prosecutors were playing their traditional role of reining in a corporate power intent on eliminating competition. Seen from another perspective, however, the government's prosecution of Microsoft -- in which it deployed the century-old Sherman Antitrust Act in the volatile and evolving global business environment of the digital era -- was unprecedented. In this book, two experts on competition policy offer a comprehensive account of the multiple antitrust actions against Microsoft--from beginning to end -- and an assessment of the effectiveness of antitrust law in the twenty-first century. Gavil and First describe in detail the cases that the Department of Justice and the states initiated in 1998, accusing Microsoft of obstructing browser competition and perpetuating its Windows monopoly. They cover the private litigation that followed, and the European Commission cases decided in 2004 and 2009. They also consider broader issues of competition policy in the age of globalization, addressing the adequacy of today's antitrust laws, their enforcement by multiple parties around the world, and the difficulty of obtaining effective remedies -- all lessons learned from theMicrosoftcases.

    eISBN: 978-0-262-31921-8
    Subjects: Law, Technology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-x)
  4. 1 The Microsoft Antitrust Cases
    (pp. 1-16)

    Microsoft Corporation’s origins are legendary in the world of technology firms. Microsoft was founded in 1975 by Bill Gates and Paul Allen. Its most significant early product breakthrough came in the early 1980s, when it spearheaded the development of the first operating system for the IBM PC: the Microsoft disk operating system (MS-DOS). Late in 1985, building on the success of MS-DOS, Microsoft launched the first version of Windows. In 1989 it launched its first “suite” of office-productivity software, which it marketed under the name Office. The collective success of MS-DOS, Windows, and Office, fueled by advances in microchip technology...

  5. 2 Microsoft’s Early Encounters with the U.S. Antitrust System: The FTC Investigation and the Antitrust Division’s Licensing Case
    (pp. 17-50)

    Microsoft’s engagement with the U.S. antitrust system didn’t begin in 1998 with the commencement of the Windows 98 cases mentioned in chapter 1. Eight years earlier, the Federal Trade Commission opened a non-public investigation of the company that went on for more than three years before stalling when the FTC twice deadlocked on votes to issue complaints (once in February and once in July of 1993). When it became clear that no majority could be assembled either to initiate a case against Microsoft or to drop the matter—and after a change of administrations in Washington brought in an eager...

  6. 3 Bringing the Windows 95/98 Monopolization Case
    (pp. 51-88)

    On May 26, 1995, Bill Gates distributed to his executive staff a now-famous memorandum, “The Internet Tidal Wave,” in which he discussed the coming importance of the Internet to Microsoft’s business and described how the Internet would transform communications.¹ “The Internet is the most important single development to come along since the IBM PC was introduced in 1981,” Gates wrote. Presciently, he predicted a world in which “virtually every PC will be used to connect to the Internet” and recognized the coming importance of using the Internet to transmit video and audio content.² Gates also identified a competitive threat from...

  7. 4 Concluding the Windows 95/98 Case: Appeal and Settlement
    (pp. 89-132)

    As was often the case in theMicrosoftlitigation, time was pressing. It was June 7, 2000, more than two years since the litigation was filed. Judge Thomas Penfield Jackson had just entered his final judgment, granting the plaintiffs the remedy they had requested and ordering that Microsoft be broken up.¹ Microsoft would certainly appeal to the U.S. Court of Appeals for the District of Columbia Circuit. That appeal, likely to be followed by an effort to seek review in the U.S. Supreme Court, would further prolong the litigation and defer the implementation of any final remedy for Microsoft’s violations...

  8. 5 Private Litigation in the United States
    (pp. 133-184)

    In the wake of the governments’ cases against Microsoft, the firm faced more than 200 civil actions by private parties alleging they were injured by its conduct. The most easily predicted of these cases were filed by Netscape and Sun, the two most prominently identified targets of Microsoft’s conduct in the governments’ cases. But the governments’ cases in the United States, and their counterpart in Europe (discussed in chapter 6), also generated cases by RealNetworks and Novell and a significant settlement with IBM. Although IBM never filed suit, it was identified as an injured party in the U.S. government’s case....

  9. 6 Antitrust as a Global Enterprise
    (pp. 185-234)

    The most profound development in antitrust law at the close of the twentieth century was not its engagement with the business of the information and technology age, but its expansion into a global enterprise. As late as the 1980s, robust antitrust enforcement was the concern of a relatively small group of jurisdictions led by the United States, the European Union, Germany, Canada, and Australia.¹ But with the fall of the Soviet Union in the early 1990s and other global political and economic developments, more and more nations turned away from centrally planned economies. These nations sought instead to develop or...

  10. 7 The Challenge of Remedy
    (pp. 235-280)

    On December 28, 2007, Netscape announced in a blog entry that AOL would be discontinuing its support for Netscape’s browser, which AOL had acquired in 1999 for $10.2 billion. On March 1, 2008, AOL officially pulled the plug. Netscape didn’t live to see its fourteenth birthday.¹

    The report of Netscape’s death in 2008 was greatly exaggerated, however. Netscape had actually died in May of 1998, less than a year before it was acquired by AOL. As we have already seen, Judge Thomas Penfield Jackson declined to rule on the plaintiff governments’ request to preliminarily enjoin the distribution of Windows 98...

  11. 8 In Praise of Institutional Diversity
    (pp. 281-308)

    On June 27, 2001, the chairman of the House Judiciary Committee, Representative F. James (Jim) Sensenbrenner, introduced a bill to establish an Antitrust Modernization Commission that would investigate and study “issues and problems relating to the modernization of the antitrust laws.” Among the subjects deserving of study, Sensenbrenner said, were the question of how antitrust enforcement should be modified in the global economy and the question of the proper role of the state attorneys general in antitrust enforcement.¹ A day after Sensenbrenner introduced his bill, the Court of Appeals for the D.C. Circuit handed down its decision in Microsoft’s appeal...

  12. 9 Lessons from the Microsoft Cases
    (pp. 309-330)

    Microsoft has now entered the third decade of its engagement with the global system for enforcing competition policy. As we noted in chapter 1, that engagement has been almost unique in its scope and duration and has been uniquely revealing of the content and characteristics of that system. While distinctive in some ways, however, Microsoft’s experience also is predictive of the future direction of antitrust enforcement, particularly for firms with dominant market positions in multiple jurisdictions. Such firms can expect global scrutiny when their conduct has a significant potential to affect competition adversely. International complexity, both substantive and institutional, is...

  13. Appendix Chronology of Microsoft Antitrust Cases and Related Events
    (pp. 331-338)
  14. Notes
    (pp. 339-438)
  15. Index
    (pp. 439-450)