Microsoft Final Judgments Benefit Competition, Consumers: Antitrust Division

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Final judgments entered in the federal/state antitrust enforcement action against Microsoft Corporation in 2002 have benefited competition and consumers, according to the Department of Justice Antitrust Division.

"The judgment has protected the development and distribution of middleware --including web browsers, media players, and instant messaging software --that has increased choices available to consumers," the Justice Department stated.

In an August 30 joint filing with the federal district court in Washington, D.C., the Justice Department and the states of New York, Louisiana, Maryland, Ohio, and Wisconsin submitted a review of the Microsoft final judgments (2006-2 CCH Trade Cases ¶75,418; 2006-2 CCH Trade Cases ¶75,541), which resulted from federal/state allegations that the computer software company "unlawfully maintained its monopoly in PC-based operating systems by excluding competing software products known as middleware that posed a nascent threat to the Windows operating system."

"The final judgments have been successful in protecting the development and distribution of middleware products and in preventing Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit," said Thomas O. Barnett, Assistant Attorney General in charge of the Department of Justice Antitrust Division. "The Antitrust Division has made enforcement of the final judgments an important priority and will continue to vigorously enforce the antitrust laws in computer software markets."

According to the August 30 court filing, there have been "a number of developments in the competitive landscape relating to middleware and to PC operating systems generally that suggest that the Final Judgments are accomplishing their stated goal of fostering competitive conditions among middleware products ..." The report cites:

 Increased competition facing Microsoft's Internet Explorer from other Web browsers;

 The popularity of Apple's iTunes and Adobe's Flash for handling multimedia content;

 The increasing use of Web-based services for e-mail and other applications that historically would have been handled by local applications; and

 The decisions by computer manufacturers to offer the option of computers pre-loaded with a Linux operating system rather than Windows.

Since Microsoft was never found to have acquired or increased its monopoly market share unlawfully, the final judgments were not designed to eliminate Microsoft's Windows monopoly or reduce Windows' market share by any particular amount, the court filing noted.

Rather, the final judgments were designed to re-invigorate competitive conditions that Microsoft had suppressed so that the market could determine the success of these software products. The final judgments are succeeding in that goal, according to the Justice Department.

The Microsoft final judgments are scheduled to expire in November 2007. The Department concluded that it was necessary to extend certain provisions of the final judgments relating to protocol licensing until November 2009. Microsoft agreed to that extension, which was approved by the federal district court in 2006. Microsoft has also agreed that the Department and state antitrust enforcement agencies may, at their discretion, apply to the court in fall 2009 for an additional extension to all or part of the extended provisions of the final judgments for a period of up to three additional years, through November 2012.

A news release on the filing appears at the U.S. Department of Justice Antitrust Division web site.