United States v. Microsoft Corp.

253 F.3d 34 (D.C. Cir. 2001)

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Nature of the Case

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Facts

The United States (P) and individual States filed a complaint against D that is had violated §§ 1 and 2 of the Sherman Act. The complaint was based on d's varied efforts to unseat Netscape Navigator as the preeminent internet browser. Ps charged four distinct violations of the Sherman Act: (1) unlawful exclusive dealing arrangements in violation of § 1; (2) unlawful tying of Internet Explorer to Windows 95 and Windows 98 in violation of § 1; (3) unlawful maintenance of a monopoly in the PC operating system market in violation of § 2; and (4) unlawful attempted monopolization of the internet browser market in violation of § 2. There was no doubt that D enjoyed almost absolute market power for operating system software but was faced with stiff competition for internet browser software. Ps claimed that Ds bundling its operating system with its internet browser product was a per se violation of the Sherman Act. In this case, after concluding that D had monopoly power, the District Court held that D had violated §2 by engaging in a variety of exclusionary acts (not including predatory pricing), to maintain its monopoly by preventing the effective distribution and use of products that might threaten that monopoly. Specifically, the District Court held D liable for: (1) the way in which it integrated IE into Windows; (2) its various dealings with Original Equipment Manufacturers ('OEMs'), Internet Access Providers ('IAPs'), Internet Content Providers ('ICPs'), Independent Software Vendors ('ISVs'), and Apple Computer; (3) its efforts to contain and to subvert Java technologies; and (4) its course of conduct as a whole. As for tying, the key District Court findings are that (1) D required licensees of Windows 95 and 98 also to license IE as a bundle at a single price; (2) D refused to allow OEMs to uninstall or remove IE from the Windows desktop; (3) D designed Windows 98 in a way that withheld from consumers the ability to remove IE by use of the Add/Remove Programs utility; (stating that IE was subject to Add/Remove Programs utility in Windows 95); and (4) D designed Windows 98 to override the user's choice of default web browser in certain circumstances. The court found that these acts constituted a per se tying violation. D argues that Windows (the tying good) and IE browsers (the tied good) are not 'separate products,' and that it did not substantially foreclose competing browsers from the tied product market. D appealed.