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TheMicrosoftCase TheMicrosoftCase:Antitrust,HighTechnology, andConsumerWelfare WilliamH.PageandJohnE.Lopatka TheUniversityofChicagoPress :: ChicagoandLondon WilliamH.PageistheMarshallM.CriserEminentScholaratthe UniversityofFloridaLevinCollegeofLaw.JohnE.Lopatkaisthe A.RobertNollDistinguishedProfessorofLawatthePennsylvania StateUniversityDickinsonSchoolofLaw. TheUniversityofChicagoPress,Chicago60637 TheUniversityofChicagoPress,Ltd.,London (cid:1)c 2007byTheUniversityofChicago Allrightsreserved.Published2007 PrintedintheUnitedStatesofAmerica 16 15 14 13 12 11 10 09 08 07 1 2 3 4 5 isbn-13:978-0-226-64463-9(cloth) isbn-10:0-226-64463-4(cloth) LibraryofCongressCataloging-in-PublicationData Page,WilliamH.(WilliamHepburn),1951– TheMicrosoftcase:antitrust,hightechnology,andconsumerwelfare/ WilliamH.PageandJohnE.Lopatka. p. cm. Includesbibliographicalreferencesandindex. isbn-13:978-0-226-64463-9(cloth:alk.paper) isbn-10:0-226-64463-4(cloth:alk.paper) 1.UnitedStates—Trials, litigation,etc. 2.MicrosoftCorporation—Trials,litigation,etc. 3.Antitrustlaw—UnitedStates. 4.Restraintoftrade—UnitedStates. 5.Computersoftwareindustry—Lawandlegislation—UnitedStates. I.Lopatka,JohnE. II.Title. kf228.u5p342007 345.73(cid:2)0268—dc22 2006036166 (cid:1)∞ Thepaperusedinthispublicationmeetstheminimumrequirementsof theAmericanNationalStandardforInformationSciences—Permanence ofPaperforPrintedLibraryMaterials,ansiz39.48-1992. ToJudy,Bekah,andHannah ToMarie,Ted,andClaire Contents Preface ix 1 Origins 1 IdeologicalSourcesofAntimonopolizationLaw 2 Microsoft‘sPredecessors:ThePublicMonopolizationCase 4 Microsoft‘sBeginnings:APost-ChicagoConvergence 19 2 Decisions 33 Chronology 34 TheLiabilityDecisions 35 TheRemedialDecisions 70 TheFollow-onPrivateLitigation 78 TheEuropeanCommissionDecision 80 3 Markets 85 TwoSystemsofBeliefaboutOperatingSystemsand Middleware 86 NetworkEffectsandRelatedEconomicConcepts 91 DefiningSoftwareMarkets 96 4 PracticesI:Integration 115 APreliminarySkirmish 119 IntegrationonTrial 123 RethinkingandRedefiningIntegrationunderShermanAct Standards 129 5 PracticesII:TheMarketDivisionProposal, ExclusiveContracts,andJava 167 TheMarketDivisionProposal 168 TheExclusiveContracts 184 Java 191 6 Remedies 203 TheGoalsofAntitrustRemedies 204 StructuralRemedies 205 ConductRemedies 212 DamageRemedies 224 Aftermath 243 Notes 249 Index 331 Preface OnMay18,1998,theUnitedStates,nineteenstates,and the District of Columbia sued Microsoft Corporation, charging that the firm had monopolized the market for personalcomputeroperatingsystemsbycrushingacom- petitivethreatposedbyNetscape’sWebbrowserandSun Microsystems’ Java technologies. After a widely publi- cizedtrial,JudgeThomasPenfieldJacksonruledforthe UnitedStatesonvirtuallyallofitsliabilityclaimsandac- cepted its proposed remedy, ordering Microsoft broken up.In the centraldecisionof thelitigation,however,the court of appeals in 2001 reversed Judge Jackson’s reme- dialorderandsomeofhisliabilityrulings,andremanded toadifferenttrialjudge.NowunderaRepublicanadmin- istration,theDepartmentofJusticeandsomeofthestates settledforamorelimitedconductorder,whileotherstates pressedonformoresweepingrelief.Ultimately,thecourts approved the proposed consent decree and awarded the nonsettling states similar relief. Meanwhile, the govern- ment case spawned hundreds of follow-on lawsuits by Microsoft’s rivals, business partners, and consumers in bothstateandfederalcourts,andEuropeanantitrustof- ficials brought their own claims. The total payouts in settlementsoftheprivatecasesrunintothebillions. Microsoftisthedefiningantitrustcaseofourera,and willbethefocusofscholarlydiscussionabouttheproper

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In 1998, the United States Department of Justice and state antitrust agencies charged that Microsoft was monopolizing the market for personal computer operating systems.  More than ten years later, the case is still the defining antitrust litigation of our era.  William H. Page and John E. Lopatka
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In 1998, the United States Department of Justice and state antitrust agencies charged that Microsoft was monopolizing the market for personal computer operating systems.  More than ten years later, the case is still the defining antitrust litigation of our era.  William H. Page and John E. Lopatka

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