Judge rules Microsoft violated antitrust laws

Journal Record, The (Oklahoma City), Apr 4, 2000

WASHINGTON (AP) -- Humbling a proud giant of the computer age, a federal judge ruled Monday that Microsoft violated U.S. antitrust laws by keeping "an oppressive thumb" on competitors during the race to link Americans to the Internet.

In a sweeping verdict against the empire that Bill Gates built, U.S. District Judge Thomas Penfield Jackson said Microsoft violated the Sherman Antitrust Act, just as Standard Oil and AT&T did in earlier antitrust cases.

He concluded that the company was guilty -- as the federal government, 19 states and the District of Columbia had alleged in the case that began in October 1998 -- of "unlawfully tying its Web browser" to its Windows operating system that dominates the computer market worldwide.

"Microsoft placed an oppressive thumb on the scale of competitive fortune, thereby effectively guaranteeing its continued dominance" in the market, Jackson wrote.

The verdict affirms Jackson's previous ruling in November that the software giant is a monopoly, one that illegally used its power to bully competitors, stifle innovation and hurt consumers in the process.

The judge's ruling can be appealed, delaying its impact for years, and Gates said the company would pursue that avenue.

While Microsoft "did everything we could to settle this case, we believe we have a strong case on appeal," Gates said. "This ruling turns on its head the reality that consumers know: that our software has helped make PCs accessible and more affordable to millions of Americans."

The decision opens the door for the federal government to seek drastic penalties against Microsoft.

The options range from breaking up the company that made Gates a billionaire to forcing it to share its proprietary software code with competitors. Jackson also paved the way for states to seek penalties under their own anticompetition laws.

"Microsoft maintained its monopoly power by anticompetitive means and attempted to monopolize the Web browser market," the judge wrote in a ruling that caused a record-plunge in the Nasdaq market even before its release. Microsoft stock dropped by more than $15 a share to close at $90.875, costing Gates about $12.1 billion in paper losses.

The Justice Department vowed to press the case until consumers are rewarded.

"Microsoft has been held accountable for its illegal conduct by a court of law," Attorney General Janet Reno said. "Thanks to this ruling, consumers who have been harmed can now look forward to benefits."

Reno's antitrust chief, Joel Klein, said he was still open to a settlement but that it would have to redress the violations cited in Monday's ruling.

"Microsoft's anticompetitive actions trammeled the competitive process through which the computer software industry generally stimulates innovation and conduces to the optimum benefit of consumers," Jackson wrote.

The allegations stem from a lawsuit filed by the Justice Department and 19 states and the District of Columbia against the Redmond, Wash.-based company.

Jackson wrote that Microsoft made arrangements with computer manufacturers and Internet providers that "successfully ostracized" Navigator, a browser made by Microsoft rival Netscape Communications, in favor of the company's Internet Explorer.

Microsoft adopted "aggressive measures" to ensure that access providers would encourage the use of Explorer over Navigator, Jackson wrote, adding, "There are no valid reasons to justify the full extent of Microsoft's exclusionary behavior."

Both sides tried to postpone a ruling by working the last four months through a court-appointed mediator. The talks collapsed over the weekend, prompting Jackson to release his verdict.