Weekly Online Lesson Online Lesson Archives Grade Level: 9-12 Subject: Economics/Law

United States v. Microsoft

On November 5, 1999, District Court Judge Thomas Penfield Jackson found that Microsoft Corporation used its monopoly position in the operating system market to unfairly mute competition in other technology markets, including the Internet Browser market.

The U.S. Department of Justice and 20 states are claiming Microsoft is conducting business in violation of the Sherman Antitrust Act of 1890. The act is designed to protect consumers and to guard against businesses fixing prices, rigging bids or allocating customers.

In his finding, Judge Jackson said that "to the detriment of consumers ... Microsoft has done much more than develop innovative browsing software of commendable quality and offer it bundled with Windows at no additional charge." As has been shown, "Microsoft also engaged in a concerted series of actions designed to protect the applications barrier to entry, and hence its monopoly power, from a variety of middle-ware threats including Netscape’s Web browser and Sun Microsystems' implementation of Java."

Did Microsoft do anything wrong or were they just competing in an open technology market? Did Microsoft squash the competition, or did consumers choose the best product? And if Microsoft is in violation of antitrust laws, what is the correct response by the government? In this online lesson you will learn more about the issues and opinions surrounding this important legal action.

The Microsoft Trial

What is the Sherman Antitrust Act of 1890 and how does a law so old relate to software companies in the 1990's? You can learn the answers to these and many other questions about the trial at MSNBC's special report Microsoft Trial FAQ. Microsoft is an MSNBC partner, but the report (published a month before these recent findings) contains remarkably objective information about the trial. Pay particular attention to the sections on predatory conduct, tying, and exclusionary agreements.

Research another excellent presentation of the government's case against Microsoft at Policy.com, a comprehensive public policy resource and community. Go to the U.S. vs. Microsoft Special Report and read these sections: Introduction, The Browser Battle, The Antitrust Doctrine, and The Complaint. Next click the Antitrust Law link and study the US laws that help ensure fair trade and consumer protection (explore the related links as needed).

Now comes the debate. Read The Government's Case and The Case for Competition for insight into the government's position. Next read Microsoft Responds and The Case for Innovation for insight into Microsoft's position.

You may be thinking that both sides have a strong argument (they do). You have already read a portion of Judge Jackson's findings — it's time now to read the whole thing. You can find links to many of the documents relative to the trial at Department of Justice Antitrust Case Filings site for Microsoft. If you have Acrobat Reader installed, or a word processor capable of displaying a document in WordPerfect 5.1 format, you can download and read the Court's Findings of Fact. For an HTML version, go HERE.

At this point, do you disagree with any of the court's findings? Do you agree on all points?

Freedom to Innovate vs. Freedom to Compete

There are more positions to consider. Browse to Microsoft's PressPass site to read the company's response to the court's Findings of Fact. Read the article about Innovation and Competition Thriving in the Marketplace, and then read Bill Gates' Letter to Customers, Partners and Shareholders as well as his Statement on the Findings of Fact.

What is your response to Gates' assertion that the computer industry is thriving, innovative, competitive, and that that customers are benefiting? Does you believe it has any bearing on the trial with regards to the law?

Next, read the Antitrust statement by the Association for Competitive Technology. Are you persuaded that government enforcement of antitrust laws relative to information technologies (IT) go beyond the specified limits? Is the government overstepping its bounds?

For a more favorable view of the DOJ findings, visit TechWeb.com and read Great Divide: Too Much Government Or Not Enough?: Call to split up Microsoft. Of the three governmental remedies proposed, which do you think would have the greatest impact on the computer industry?

Editorial Cartoons

Editorial cartoonist have been having a field day over Bill Gates and the antitrust suit. Most are targeting Gates as the bad guy, but some target the government. Browse the cartoons by at Daryl Cagle's Pro Cartoonists Index and find one cartoon in support of the government and one in support of Microsoft. Which is more effective in shaping your opinion about the trial? How did the cartoonist achieve this?

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