Judge finds Microsoft wielded monopoly power

By John Fontana
Network World, 11/08/99

Washington, D.C. - Microsoft is a monopoly in the operating system market, according to a ruling handed down today by U.S. District Judge Thomas Penfield Jackson in the government's antitrust trial against the software giant.

findings pic The judge said Microsoft abused its monopoly power and hurt competitors such as Netscape, Intel and IBM in the process.

"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," Jackson wrote.

Microsoft officials immediately expressed their disappointment in Jackson's findings, which could drastically change the face of Microsoft and the technology industry in the months and years to come. For customers, the ruling could result in more product choice and a significantly more humble Microsoft.

Jackson said Microsoft enjoys monopoly power for three reasons:

"First, Microsoft's share of the market for Intel-compatible PC operating system market 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."

"Microsoft took it hard on the chin (with this ruling)," says Hillard Sterling, senior litigator for Gordon & Glickson P.C. in Chicago. "It was uniformly and convincingly against Microsoft on every fact."

Jackson's findings are just the first part of his ruling. They merely establish the facts of the case after 76 days of testimony. Jackson also will issue "conclusions of law" and punishment, both of which are likely to be handed down early next year.

"It's only the fifth inning and Microsoft has plenty of game left," Sterling says.

Those punishments could be drastic - even calling for the break-up of Microsoft into separate companies along product lines. The traditional remedy in antitrust cases has been to break up the companies, much like in cases against Standard Oil and AT&T.

Then again, Jackson could hand out a series of penalties that may include fines and restrictions on how Microsoft distributes and licenses its software.

"I don't think Judge Jackson will break up the company. I don't think the violation rises to that level," says Marc Schildkraut, an antitrust lawyer at Howrey & Simon, a law firm in Washington, D.C.

A settlement between the two sides also is not out of the question, particularly if "Judge Jackson's findings of fact are viewed as the handwriting on the wall" by Microsoft, says Raymond Jacobsen, head of the antitrust group at McDermott, Will & Emery, a Washington, D.C. law firm.

Microsoft may well head toward the U.S. Court of Appeals for the District of Columbia Circuit, where it garnered a favorable ruling earlier this year.

The case could make it all the way to the Supreme Court and likely will take several years before a final verdict is reached.

Forum: You be the judge Here's what some Fusion users are saying about the ruling and what the overall verdict should be: What do you think? Add your comments to the thread