CASE 17 Networks , Standards , and the Use of Market Dominance : Microsoft ( 1995 )

On July 15, 1994, the Department of Justice brought a complaint against the Microsoft Corporation alleging violations of Sections 1 and 2 of the Sherman Act. The complaint alleged that Microsoft used exclusionary and anticompetitive contracts to market its personal computer operating system software and thereby unlawfully maintained its monopoly of personal computer (PC) operating systems and unreasonably restrained trade. Simultaneous with the filing of the complaint, Microsoft and the Department of Justice entered into a consent decree in which Microsoft agreed to abide by certain restrictions in its licensing arrangements.1 The consent decree enabled the Department of Justice to remedy anticompetitive practices, permitted Microsoft to agree to those remedies without admitting antitrust liability, and avoided a likely protracted trial. After a year of legal wrangling, the consent decree was formally approved by the courts on June 16, 1995. This chapter provides a brief history of the federal antitrust investigation of Microsoft leading to the consent decree. It then describes the allegations of anticompetitive conduct in the government’s complaint and summarizes key provisions of the consent decree. It chronicles the judicial skirmish between the U.S. District Court, the Department of Justice, and