United States v. Microsoft Corp.: Microsoft is ruled to have violated United States antitrust law by keeping "an oppressive thumb" on its competitors.
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization.Federal antitrust laws provide for both civil and criminal enforcement. The Federal Trade Commission, the United States Department of Justice Antitrust Division, and private parties who are sufficiently affected may all bring civil actions in the courts to enforce the antitrust laws. However, criminal antitrust enforcement is done only by the Justice Department. U.S. states also have antitrust statutes that govern commerce occurring solely within their state borders.
The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated. Some economists argue that antitrust laws actually impede competition, and may discourage businesses from pursuing activities that would be beneficial to society. One view suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest. A survey of 568 member economists of the American Economic Association (AEA) in 2011 found a near-universal consensus, in that 87 percent of respondents broadly agreed with the statement "Antitrust laws should be enforced vigorously."
United States v. Microsoft Corporation, 253 F.3d 34 (D.C. Cir. 2001) is a noted American antitrust law case in which the U.S. government accused Microsoft of illegally maintaining its monopoly position in the personal computer (PC) market primarily through the legal and technical restrictions it put on the abilities of PC manufacturers (OEMs) and users to uninstall Internet Explorer and use other programs such as Netscape and Java. At trial, the district court ruled that Microsoft's actions constituted unlawful monopolization under Section 2 of the Sherman Antitrust Act of 1890, and the U.S. Court of Appeals for the D.C. Circuit affirmed most of the district court's judgments.
The plaintiffs alleged that Microsoft had abused monopoly power on Intel-based personal computers in its handling of operating system and web browser integration. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Windows operating system. Bundling them is alleged to have been responsible for Microsoft's victory in the browser wars as every Windows user had a copy of IE. It was further alleged that this restricted the market for competing web browsers (such as Netscape Navigator or Opera), since it typically took a while to download or purchase such software at a store. Underlying these disputes were questions over whether Microsoft had manipulated its application programming interfaces to favor IE over third-party web browsers, Microsoft's conduct in forming restrictive licensing agreements with original equipment manufacturers (OEMs), and Microsoft's intent in its course of conduct.
Microsoft argued that the merging of Windows and IE was the result of innovation and competition, that the two were now the same product and inextricably linked, and that consumers were receiving the benefits of IE free. Opponents countered that IE was still a separate product which did not need to be tied to Windows, since a separate version of IE was available for Mac OS. They also asserted that IE was not really free because its development and marketing costs may have inflated the price of Windows.
The case was tried before Judge Thomas Penfield Jackson in the United States District Court for the District of Columbia. The DOJ was initially represented by David Boies. Compared to the European decision against Microsoft, the DOJ case is focused less on interoperability and more on predatory strategies and market barriers to entry.