Judge: Microsoft is a Monopoly
- By Scott Bekker
- November 05, 1999
In his long-awaited "Findings of Fact" in the U.S. Department of Justice antitrust case against Microsoft Corp., District Judge Thomas Penfield Jackson flatly calls Microsoft a monopoly and asserts that the company has stifled innovation in the computer industry.
Jackson released the 150-page document with more than 400 individual findings of fact this evening. Jackson announced two weeks earlier that he would release the findings on a Friday evening after stock markets closed.
The findings of fact -- bruising to Microsoft -- are not a ruling in the case, although the glimpse into the judge's perspective could hasten a settlement. Jackson's legal document presents his perceptions of the volumes of evidence presented during the trial, which began in October 1998.
Both sides will have time to respond to Jackson's findings, and a final ruling isn't expected until 2000.
Government attorneys all the way up to Attorney General Janet Reno were gleeful about Jackson's findings. Microsoft maintained a fighting stance, noting in its public response that the report represented a first step in a very long process that could include years of appeals.
Intense interest in the case led to lengthy waits and long download times from the government site where the document was to be posted (http://usvms.gpo.gov/) at 6:30 p.m. Eastern time. Microsoft made compressed versions of the document available for download at (www.microsoft.com/presspass/).
Jackson's findings show that he clearly agrees with the government that Microsoft is a monopoly.
"Viewed together, three main facts indicate that Microsoft enjoys monopoly power," Jackson wrote. "First, Microsoft's share of the market for Intel-compatible PC operating systems is extremely large and stable. Second, Microsoft's dominant market share is protected by a high barrier to entry. Third, and largely as a result of that barrier, Microsoft's customers lack a commercially viable alternative to Windows."
Jackson finds that the facts show Microsoft enjoys an "applications barrier to entry."
The Internet browser battle between Netscape Navigator and Microsoft's Internet Explorer was a centerpiece of the trial, and Jackson reserved some of his strongest conclusions for that debate at the end of his novella-length document.
The judge acknowledges that Internet Explorer benefitted consumers by compelling 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," he wrote.
Microsoft quickly highlighted that statement in its public response to the findings.
But Jackson's findings followed that brief praise with a conclusion that Microsoft's tactics to prevent OEMs from decoupling Internet Explorer from the base operating system had strong reverberations throughout the industry.
"Most harmful of all is the message the Microsoft's actions have conveyed to every enterprise with the potential to innovate in the computer industry," Jackson wrote. "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."
In a news conference following the ruling, Microsoft officials showed no signs of softening their public stance on the case.
"One area that we respectfully disagree is the issue of a monopoly," said Microsoft senior vice president and general counsel, Bill Neukom. "No segment of the US economy is more intensely competitive than computer software."
"We believe that at the end of this judicial process,
Microsoft's position will be recognized as not
anti-competitive, but as pro-competitive," Neukom said.
Should Microsoft enter settlement talks with the government, remedies could range from restrictive agreements to a breakup of the company.
While Microsoft officials refused to speculate about possible remedies, Bill Gates left the door open for settlement.
"We will continue to make our best efforts to resolve the case," Gates said. He added that reserving the right to innovate and add new features to products would be a
key condition of settlement talks. -- Scott Bekker and Thomas Sullivan
Scott Bekker is editor in chief of Redmond Channel Partner magazine.