Between 1998 and 1999, the year before Bill Gates donated 90% of his wealth to his Bill & Melinda Gates Foundation, the US government accused Microsoft of illegally maintaining its monopoly position in the computer market. At trial, the district court ruled that Microsoft’s actions constituted unlawful monopolization under section 2 of the Sherman Antitrust Act of 1890.
Even with Bill Gates as president of Microsoft, between 1998 and 1999, the Government of the United States of America (USA) accused Microsoft of illegally maintaining its monopoly position in the personal computer (PC) market.
In the case known as United States v. Microsoft Corporation, the plaintiffs (US Government), alleged that Microsoft had abused the monopoly power of PCs, primarily through the legal and technical restrictions it placed on the ability of manufacturers and users to uninstall Internet Explorer and use other programs such as Netscape and Java.
The central issue in the case was whether Microsoft was authorized to bundle its core Internet Explorer (IE) web browser software with its Windows operating system. Also implicit in these disputes were questions about whether Microsoft had manipulated its application programming interfaces to favor IE over other browsers.
On the US Department of Justice website, in the documentation about the case, it is possible to read in the third chapter about Microsoft’s power in the relevant market, at the time:
“Microsoft enjoys so much power in the market for Intel-compatible PC operating systems that if it wanted to exercise that power in terms of price alone, it could charge a substantially higher price for Windows than it could in a competitive market. Furthermore, it could do so over a significant period of time without losing an unacceptable volume of business to competitors. In other words, Microsoft enjoys monopoly power in the relevant market.”
Judgment
The case was heard before Judge Thomas Penfield Jackson in the United States Court for the District of Columbia.
On November 5, 1999, the judge issued his de facto findings in the case, in which he stated that Microsoft’s dominance in the PC operating system market constituted a monopoly and that Microsoft had taken steps to crush threats to that monopoly. The judgment was divided into two parts and on April 3, 2000, it issued the law findings, according to which Microsoft had committed a monopoly and violated sections 1 and 2 of the Sherman Antitrust Act.
On June 7, 2000, the court ordered the separation of Microsoft, with the company having to be divided into two units: one to produce the operating system and another to produce other software components.
Microsoft immediately appealed the decision. In response, Judge Thomas Penfield Jackson said that Microsoft’s own conduct was the cause of any possible bias. Microsoft executives had, he said, “proved time and time again to be inaccurate, misleading, evasive, and transparently false (…). Microsoft is a company with an institutional disdain for both the truth and the rules of law that smaller entities must abide by. It is also a company whose top management is not averse to offering speculative testimony to support spurious defenses to allegations of its wrongdoing”.
Microsoft was also tried in Europe, but in the US the case focused less on interoperability and more on predatory strategies and market barriers to entry.
Final sentence
The US Department of Justice, on November 2, 2001, reached an agreement with Microsoft requiring the Bill Gates company to share its application programming interfaces with other companies in the field and appoint a panel of three people. that they would have full access to Microsoft’s systems, records and source code for five years to ensure compliance and avoid monopoly.
A year earlier, in 2000, Bill Gates donated 90% of his wealth to his Bill & Melinda Gates Foundation.
In its 2008 Annual Report, Microsoft stated:
“The lawsuits brought by the US Department of Justice, 18 states, and the District of Columbia in two separate lawsuits were resolved through a Consent Act that took effect in 2001 and a Final Judgment in 2002. These lawsuits imposed several restrictions on our Windows operating system companies. These restrictions include limits on certain contracting practices, mandatory disclosure of certain computer program interfaces and protocols, and rights for computer manufacturers to limit the visibility of certain Windows features on new PCs. We believe that we are in full compliance with these rules. However, if we fail to comply, additional restrictions could be imposed on us that would adversely affect our business.”
In the next articles we will talk about Bill Gates’ charity paradox, how the Foundation works, the main investments, donations and possible conflicts of interest.
