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____/ Homer on Monday 25 May 2009 21:38 : \____
> Verily I say unto thee, that High Plains Thumper spake thusly:
>> [quote] Competition Killer: European Commission Documents 20 Years of
>> Microsoft Anticompetitive Behavior
> [...]
>>
http://www.linux-magazine.com/online/news/competition_killer_european_commission_documents_20_years_of_microsoft_anticompetitive_behavior
>
> ODF version here:
>
> http://antitrust.slated.org/eu/Finalversion_Consumerchoicepaper.odt
For indexing:
______________________________________________________________________
Microsoft: A History of Anticompetitive Behavior and Consumer Harm
March 31, 2009
TABLE OF CONTENTS
I. INTRODUCTION ………………………………………………………………1
II. MICROSOFT’S HISTORY OF ANTICOMPETITIVE CONDUCT ……………………………3
A. Microsoft’s Campaign To Destroy DR-DOS ………………………………………………….3
B. Microsoft’s Anticompetitive Per Processor License Fees …………………………………5
C. Microsoft’s Retaliation And Price Discrimination Against IBM ……………………….6
D. Microsoft’s Organized Collective Boycott Against Intel ………………………………….7
E. Microsoft’s Elimination Of Word Perfect ………………………………………………………7
F. Microsoft’s Deceptive WISE Software Program……………………………………………..9
G. Microsoft’s Elimination Of Netscape …………………………………………………………..10
H. Microsoft’s Attempts To Extinguish Java …………………………………………………….14
I. Microsoft’s Elimination Of Rival Media Players …………………………………………..16
J. Microsoft’s Campaign Against Rival Server Operating Systems……………………..18
III. MICROSOFT CONTINUES TO ENGAGE IN ANTICOMPETITIVE CONDUCT ……19
A. Microsoft’s Failure To Comply With The Final Judgment ……………………………..20
B. Microsoft’s Campaign of Patent FUD against Linux and Open Source
Software………………………………………………………………………….23
C. Microsoft’s Ongoing Misconduct Has Sparked Further European Commission
Investigations …………………………………..23
IV. MICROSOFT’S FALSE PROMISES OF INTEROPERABILITY …………………………….24
V. MICROSOFT’S MONOPOLIES HAVE HARMED CONSUMERS …………………………25
A. Microsoft’s Operating System Monopoly Has Harmed Consumers …………………25
B. Microsoft’s Office Monopoly Has Harmed Consumers………………………………….26
C. Microsoft’s Web Browser Monopoly Has Harmed Consumers ……………………….28
VI. CONCLUSION………………………………………………………31
2
I. INTRODUCTION
On January 15, 2009, the European Commission issued a new Statement of
Objections to
Microsoft, outlining the Commission’s “preliminary view that Microsoft’s tying
of its web
browser Internet Explorer to its dominant operating system Windows infringes
the EC Treaty
rules on abuse of a dominant position (Article 82)” and “distorts competition
on the merits
between competing web browsers.”1 The European Commission’s recent Statement of
Objections validates the ongoing and urgent need to address Microsoft’s
practices that affect the
openness of the Internet, consumer choice, and competition in general. This
paper provides a
brief history of Microsoft’s misconduct and demonstrates that, in light of
Microsoft’s long and
continuing use of anticompetitive tactics, the Commission’s concerns are well
justified.2
* * *
“This anti-trust thing will blow over. We haven’t changed our business
practices at all.”
— Bill Gates, Microsoft founder and then-CEO (1995)3
For more than two decades, Microsoft has engaged in a carefully designed and
extremely
successful campaign to protect and extend its monopolies. Microsoft has
repeatedly made
market allocation proposals to its competitors and has used a broad range of
other
anticompetitive and unlawful tactics to eliminate potential rivals, including
tying, predatory
product design, and intentional deception.
Microsoft owns several monopoly products, including its Windows operating
system and
Office suite of productivity applications.4 These monopolies are extremely
lucrative: Microsoft
generates more than $60 billion each year, largely from Windows and Office.5 It
has profit
margins of 77% and 65% for these two monopoly products.6 Over the years,
Microsoft has
carefully cultivated and expanded the barriers to entry protecting these
monopolies. As the D.C.
Circuit explained in discussing the barrier to entry protecting Windows:
That barrier–the “applications barrier to entry”–stems from two
characteristics of the software market: (1) most consumers prefer operating
systems for which a large number of applications have already been written;
and
(2) most developers prefer to write for operating systems that already have
a
substantial consumer base. This “chicken-and-egg” situation ensures that
applications will continue to be written for the already dominant Windows,
which
in turn ensures that consumers will continue to prefer it over other
operating
systems.7
Indeed, Microsoft originally gained its Office monopoly for the express purpose
of
strengthening the applications barrier that protects Windows. As one of
Microsoft’s senior
executives wrote in an internal document:
If we own the key “franchises” built on top of the operating system, we
dramatically widen the “moat” that protects the operating system business….
We
hope to make a lot of money off these franchises, but even more important
is that
they should protect our Windows royalty per PC…. And success in those
businesses will help increase the opportunity for future pricing
discretion.8
Microsoft recognized, however, that owning Office and other applications would
not
alone be sufficient. In particular, Microsoft saw a serious potential threat in
the form of so-called
“middleware” products. Middleware products are software products that, like
Windows, expose
application programming interfaces (”APIs”) that software developers can use in
writing other
applications. Microsoft recognized that, if any middleware product gained
widespread
popularity, “developers might begin to rely upon APIs exposed by the middleware
for basic
routines rather than relying upon the API set included in Windows.”9 Microsoft
has therefore
crushed middleware threats, such as Netscape’s web browser.
Although Microsoft has paid many multimillion-dollar settlements for its
antitrust
violations over the years, these settlements have proven a small price for such
a large ongoing
revenue stream. Microsoft’s past conduct demonstrates its ability and
willingness to engage in
3
unlawful acts to the detriment of consumers, and awareness of its history is
valuable today in
understanding Microsoft’s ongoing business practices and strategies.
II. MICROSOFT’S HISTORY OF ANTICOMPETITIVE CONDUCT
This section reviews a number of Microsoft’s past actions to extinguish
potential
competitive threats. These include Microsoft’s: (a) campaign against DR-DOS;
(b)
anticompetitive per processor license fees; (c) retaliation against IBM; (d)
threats and retaliation
against Intel; (e) elimination of Word Perfect; (f) deceptive WISE software
program; (g)
elimination of Netscape; (h) deception of Java developers; (i) elimination of
rival media players;
and (j) campaign against rival server operating systems. While not
comprehensive, these
examples of Microsoft’s past misconduct provide a clear illustration of the
types of acts that
Microsoft has taken to protect and extend its monopolies.
A. Microsoft’s Campaign To Destroy DR-DOS
“[W]e need to make sure Windows 3.1 only runs on top of MS DOS.”
–David Cole, Microsoft Senior Vice-President10
“The approach we will take is to detect dr [DOS] 6 and refuse to load. The
error
message should be something like ‘Invalid device driver interface.’”
–Phillip Barrett, Microsoft Windows Development Manager11
In the early 1980s, Microsoft purchased an early version of a standard disk
operating
system (”DOS”) that became known as MS-DOS.12 At the time, a number of rival
operating
systems offered features, such as the ability to run multiple programs at the
same time, that
Microsoft’s operating systems would not offer until years later.13 At the time,
operating systems
were just beginning to move from a command-based interface to a graphical user
interface.14
Microsoft developed a graphical user interface known as Windows.15 Early
versions of
Windows did not actually “run” the computer rather, they were a shell
surrounding the
underlying DOS program, which in turn ran the computer.16 Initially, Windows
embraced the
DOS standard, which meant that Windows would run on top of any DOS, including
DR-DOS,
Microsoft’s principal rival in the DOS market.17
3
This initial interoperability came to be known as part of Microsoft’s
now-classic
“embrace, extend, and extinguish” strategy, which Microsoft has subsequently
and successfully
employed in many other product areas.18 This strategy has three phases: First,
Microsoft
“embraces” a competing product by developing software or implementing standards
that are
compatible with the competing product.19 Microsoft then “extends” its own
offering by creating
features or standards that are interoperable only with Microsoft’s proprietary
technologies.20
Finally, when Microsoft’s proprietary software or standards have achieved
widespread adoption,
Microsoft “extinguishes” its competitors by dropping any remaining pretense of
compatibility.21
In the case of DR-DOS, Microsoft’s initial decision to make Windows
interoperable
helped promote rapid adoption of the Windows shell. At the same time, however,
it meant that
many consumers chose the superior DR-DOS over MS-DOS. In an email to then-Vice
President
Steve Ballmer, Microsoft founder and then-CEO Bill Gates wrote:
“Our DOS gold mine is shrinking and our costs are soaring–primarily due to
low prices, IBM share, and DR-DOS…. I believe people underestimate the
impact
that DR-DOS has had on us in terms of pricing.”22
Microsoft “extended” Windows by making changes so that Windows would no longer
interoperate with DR-DOS smoothly.23 For example, Microsoft designed Windows to
display an
ominous error message when used in conjunction with the DR-DOS software.24
Microsoft also
4
disseminated false information about DR-DOS “so people [would] make judgments
against it
without knowing details or fa[c]ts.”25 By 1994, Microsoft had effectively
extinguished DR-DOS
as a threat to Microsoft’s own operating system.26
B. Microsoft’s Anticompetitive Per Processor License Fees
“Another [DR-DOS] prospect bites the dust with a per-processor DOS
agreement.”
–Microsoft sales employee in an internal email27
Most operating systems are purchased by original equipment manufacturers
(”OEMs”),
such as Dell and HP. OEMs preinstall operating systems on the computers they
manufacture
before selling the computers to consumers. In the late 1980s, Microsoft began
requiring OEMs
to pay Microsoft a “per processor license fee” for each computer they shipped,
regardless of
whether they installed Windows on the computer.28 This arrangement gave OEMs a
powerful
incentive not to pay for and install competing operating systems.
In 1994, the U.S. Department of Justice (”DOJ”) filed an antitrust suit against
Microsoft
challenging this conduct, resulting in a consent decree under which Microsoft
agreed to stop
using per processor license fees.29 But the anticompetitive practice had
already been quite
effective in reducing competitors’ share, particularly when combined with
Microsoft’s other
actions directed against DR-DOS.30 The DOJ consent decree also sought to impose
some
5
forward-looking relief by prohibiting Microsoft from bundling other products
into its now-dominant Windows operating system. The decree included a proviso
that permitted Microsoft to
build “integrated” products, however, and Microsoft later took the position
that, under the
decree, it could bundle “‘a ham sandwich’ in the box with a PC preinstalled
with Windows
95″and “require OEMs to take the whole package.”31
C. Microsoft’s Retaliation And Price Discrimination Against IBM
“As long as IBM is working first on their competitive offerings and prefers to
fiercely compete with us in critical areas, we should just be honest with each
other and admit that such priorities will not lead to a most exciting
relationship….”
–Joachim Kempin, Microsoft Senior Vice-President32
Also in the mid-1990s, Microsoft took a series of steps to punish IBM for
promoting a
competing operating system and personal productivity application suite. At the
time, in addition
to developing software in competition with Microsoft, IBM was also a major OEM,
selling
personal computers. As such, IBM was a major customer of Microsoft’s. Microsoft
retaliated
against IBM for developing competing software products by charging IBM
discriminatorily high
license prices for Windows, delaying licensing negotiations with IBM for
Windows 95, and
withholding technical support.33 Microsoft informed IBM executives that it
would only stop
treating IBM less favorably than other OEMs when IBM ceased competing with
Microsoft’s
software offerings.34 This resulted in $180 million in lost revenue for IBM,35
and other damages
IBM eventually brought suit against Microsoft and Microsoft settled the claim
for $775
million.36
6
D. Microsoft’s Organized Collective Boycott Against Intel
“Intel has to accept that when we have a solution we like that is decent that
that is
the solution that wins.”
–Bill Gates, Microsoft founder and then-CEO37
Microsoft used a similar approach in 1995, when it forced Intel to drop
development of
Native Signal Processing (”NSP”), a set of instructions that would have allowed
a computer’s
processor to directly support audio, video, and 3D graphics. Intel is a
manufacturer of
microprocessor chips that are purchased by OEMs to use in the computers they
manufacture.
With NSP, Intel hoped to create a platform for multimedia applications that
would run on any
operating system, not just Windows. Microsoft thus viewed NSP as a serious
threat to its
Windows monopoly. In order to extinguish NSP, Microsoft told Intel that it
would make
Windows incompatible with Intel chips if Intel did not abandon the technology,
and Microsoft
forced its OEM customers into a collective boycott of Intel’s microprocessor
chips.38 Bill Gates
reported to other senior Microsoft executives, “Intel feels we have all the
OEMs on hold with our
NSP chill.”39 Intel ultimately ceded to Microsoft’s pressure and abandoned its
NSP development
efforts.40
Shortly thereafter, Microsoft again put pressure on Intel. This time around,
Microsoft
wanted Intel to stop assisting Sun Microsystems in the promotion of its Java
technology. As Bill
Gates wrote in a 1997 email message,
“If Intel has a real problem with us supporting [Intel's microprocessor rival,
AMD] then they will have to stop supporting Java Multimedia the way they
are.”41
As a district court subsequently found, Microsoft’s campaign to induce “Intel
to stop
helping Sun create Java Multimedia APIs, especially ones that run well … on
Windows” was a
successful one.42
E. Microsoft’s Elimination Of Word Perfect
“If we own the key ‘franchises’ built on top of the operating system, we
dramatically widen the ‘moat’ that protects the operating system business…. We
hope to make a lot of money off these franchises, but even more important is
that
7
they should protect our Windows royalty per PC.”
–Jeff Raikes, Microsoft President43
“I have decided that we should not publish these [Windows 95 user interface]
extensions. We should wait until we have a way to do a high level of
integration
that will be harder for likes of Notes, WordPerfect to achieve, and which will
give
Office a real advantage…. We can’t compete with Lotus and WordPerfect/Novell
without this.”
–Bill Gates, Microsoft founder and then-CEO44
Beginning in 1994, Microsoft launched an anticompetitive campaign to extinguish
WordPerfect, an office productivity application owned by Novell and competing
with
Microsoft’s Office suite. Office productivity applications (including word
processing,
spreadsheet, and presentation applications) are one of the most important
groups of applications
and contribute substantially to the applications barrier to entry protecting
Microsoft’s operating
system monopoly.
When Microsoft began this campaign, WordPerfect enjoyed widespread popularity.
In
order to eliminate its competitor, Microsoft withheld crucial technical
information about
Windows, going so far as to extend the Windows API, the set of commands a
program uses to
communicate with the operating system, to ensure that WordPerfect did not work
smoothly with
Microsoft’s monopoly operating system.45 Microsoft also used its monopoly power
to control
industry standards, thus requiring WordPerfect to implement proprietary
technology or risk
incompatibility with Windows.46 And it excluded WordPerfect from the major
channels of
distribution for office productivity applications.47 For example, Microsoft
forbade OEMs from
pre-installing Novell products and gave discounts for refusing to sell other
developers’ office
productivity applications.48 As part of Microsoft’s strategy to eliminate
Novell, “[a] top
Microsoft executive wrote that Microsoft should ’smile’ at Novell, falsely
signifying Microsoft’s
willingness to help the two companies’ common customers integrate their various
products,
8
while actually ‘pulling the trigger’ and killing Novell.”49 Microsoft’s tactics
were, again,
extremely successful, as shown in the graphic below.50
Microsoft extinguished WordPerfect and gained a monopoly in office productivity
application
suites, accomplishing its goal of “dramatically widen[ing] the moat” protecting
its lucrative
Windows monopoly.
F. Microsoft’s Deceptive WISE Software Program
“Please give me one good reason why we should even consider [enabling
Microsoft technology to work on competing systems]. (Hint: any good answer
needs to include making more money and helping kill Unix, Sybase or Oracle.)”
–James Allchin, Microsoft Senior Vice-President51
In 1994, Microsoft engaged in similarly deceptive conduct to combat the growing
popularity of the UNIX operating system within corporate networks. Microsoft
faced a choice:
whether to “love it to death (invest a lot of money and kill it slowly) or
ignore it (invest no
money on the expectation it will die quickly).”52 Microsoft chose initially “to
invest in
interoperating” with UNIX,53 by promoting its Windows Interface Source
Environment
9
(”WISE”), a program that purportedly allowed developers to write software to
Windows APIs
and run the resulting programs on Macintosh and UNIX systems.54
Microsoft’s plan was successful. By 1996 Microsoft had captured a large share
of the
corporate market. Microsoft then took the next step in its standard “embrace,
extend,
extinguish” playbook and extended the Windows API without copying its changes
to the WISE
program. This meant that developers could no longer smoothly port applications
to UNIX and
Macintosh.55 In public, however, Microsoft continued to lead developers into
believing that this
software was still fully cross-platform.56 In 1997, Bill Gates noted in an
internal email that those
developers who wrote applications for the then-available software without
realizing that it would
not port all APIs to UNIX and Macintosh were “just f*****.”57 He was right:
Microsoft had
successfully extinguished the cross-platform threat to its operating system
monopoly. In a
subsequent antitrust suit, a district court called this move “a
classic ‘bait-and-switch’ tactic.”58
G. Microsoft’s Elimination Of Netscape
“Microsoft first proposed to Netscape that, rather than compete with each
other, the two
companies should enter an illegal conspiracy to divide up the market. When
Netscape
refused, Microsoft then used its Windows monopoly to, in Microsoft’s own
words, ‘cut off
Netscape’s air supply.’”
–Joel Klein, Assistant Attorney General (quoting Paul Maritz, Microsoft’s
then-Group Vice President of the Platform Applications Group)59
10
In 1996, Microsoft began a series of steps to eliminate a threat to its
operating system
monopoly from Netscape’s web browser. Web browsers are “middleware” products,
meaning
that they expose APIs that developers can use in writing other applications.
Microsoft
recognized that if developers began using the APIs in Netscape’s browser rather
than the APIs in
Windows, consumers might eventually have access to the applications they needed
from any
computer with Netscape’s browser installed and would not be locked into
computers running
Windows.
Microsoft first sought to deal with this threat through a direct market
allocation proposal:
Microsoft told Netscape that if Netscape would agree to stop exposing APIs,
Microsoft would
provide Netscape with special help in developing “value-added” software
applications that relied
on Microsoft’s proprietary technologies.60 Netscape rejected Microsoft’s
proposal.
Microsoft then responded by taking steps to “cut off Netscape’s air supply.”61
It
developed its own web browser, Internet Explorer, and then technologically and
contractually
tied Internet Explorer to its monopoly Windows operating system.62 To ensure
that only Internet
Explorer ran well on Windows, Microsoft designed Windows, as its then-Vice
President Brad
Chase wrote, to make “running any other browser a jolting experience.”63 To
ensure that
Internet Explorer had exclusive access to the primary browser distribution
channels, Microsoft
also used an extensive set of exclusive-dealing contracts with OEMs,
independent software
vendors (”ISVs”), Apple, and others.64
Microsoft was very aggressive in its campaign to shut Netscape out of all major
distribution channels. For example, when Apple resisted distributing
Microsoft’s Internet
Explorer web browser with its Mac OS operating system, Microsoft threatened to
stop supplying
Microsoft Office for Mac OS.65 As the district court found, “ninety percent of
Mac OS users
running a suite of office productivity applications [used] Microsoft’s Mac
Office. In 1997,
Apple’s business was in steep decline…. Had Microsoft announced in the midst of
this
atmosphere that it was ceasing to develop new versions of Mac Office, a great
number of ISVs,
11
customers, developers, and investors would have interpreted the announcement as
Apple’s death
notice.”66
The importance of Office to Apple did not go unnoticed by Microsoft. As
Microsoft’s
then-program manager for Windows, Ben Waldman, explained in an email to Bill
Gates and
then-CFO Greg Maffei: “The threat to cancel Mac Office 97 is certainly the
strongest
bargaining point we have, as doing so will do a great deal of harm to Apple
immediately.”67 Or,
as one Microsoft Vice President put it in an email to Ben Waldman, “MacOffice
is the perfect
club to use” to persuade Apple to “materially disadvantage[] Netscape.”68 Apple
capitulated
and began pre-installing Internet Explorer as the default (and exclusive)
browser on Mac
machines. Apple even agreed to push its own employees to use Internet
Explorer.69
Once Microsoft had achieved wide distribution for its own browser through these
tactics,
it then moved to “extend” (in effect, customize) industry standards for
HyperText Markup
Language (”HTML”) and Cascading StyleSheets (”CSS”) to ensure that users would
become
reliant on Microsoft’s own web browser.70 Microsoft also introduced its ActiveX
technology
extensions, which allowed software written much like traditional computer
programs to run in
the Internet Explorer browser, but that only worked on Microsoft’s monopoly
operating
system.71
As shown in the graphic below, Microsoft’s campaign was highly successful.72
12
By 1998, Microsoft executives were confident that “the browser battle is close
to over” and that
they had extinguished the threat to the Windows monopoly.73 As Kumar Mehta of
Microsoft
explained, “We set out on this mission 2 years ago to not let [N]etscape
dictate standards and
control the browser [APIs]. All evidence today says they don’t.”74 This conduct
was at the heart
of the 1998 suit against Microsoft by the DOJ and twenty U.S. States.75 The
district court found
that Microsoft violated the antitrust laws in its conduct to maintain its
operating system
monopoly against the threat posed by Netscape, and the D.C. Circuit affirmed
this conclusion.76
Unfortunately, however, as discussed further below and as noted by several
prominent
commentators, the U.S. browser case was settled with a consent decree that has
been wholly
ineffective in restoring competition to the state that prevailed prior to
Microsoft’s unlawful
actions.77
13
H. Microsoft’s Attempts To Extinguish Java
“Kill cross-platform Java by grow[ing] the polluted Java market.”
–MicrosoftVJ98 SKUs and Pricing Proposal78
“[W]e should just quietly grow j++ share and assume that people will take more
advantage of our classes without ever realizing they are building win32-only
java
apps.”
–Microsoft’s Thomas Reardon79
In 1996, Microsoft turned its attention to Sun Microsystems’ Java middleware
technologies as another nascent threat to its operating system monopoly.80 Sun
Microsystems
was at the time promoting its Java technologies with the slogan,
“Write-once-run-anywhere” to
illustrate the cross-platform benefits of writing Java applications.81
Microsoft immediately recognized Java as middleware and moved to eliminate this
threat. As usual, Microsoft first embraced Java by licensing the technology
from Sun
Microsystems and investing in building its own Java-related developer tools.82
Microsoft then
14
extended its Java developer tools with its own proprietary technology.83 In
fact, Microsoft went
so far as actively to deceive Java developers into believing that the Microsoft
Java tools were
platform independent.84 In an internal email, Microsoft software engineer Ben
Slivka instructed
Microsoft’s Visual Studio team: “Don’t encourage new cross-platform Java
classes; especially
don’t help get great Win32 implementations written/deployed. Do encourage
fragmentation of
the Java classlib space….”85
Microsoft also used exclusive agreements to promote its “polluted” version of
Java and,
as noted above, Microsoft threatened Intel to stop Intel from supporting Sun
Microsystems’ Java
standards.86 As the D.C. Circuit later explained, “Microsoft’s Paul Maritz told
a senior Intel
executive that Intel’s [development of software that was compatible with] Sun’s
Java standards
was as inimical to Microsoft as Microsoft’s support for non-Intel
microprocessors would be to
Intel…. Microsoft threatened Intel that if it did not stop aiding Sun on the
multimedia front, then
Microsoft would refuse to distribute Intel technologies bundled with
Windows.”87 Intel
capitulated, and dropped its support for Java.
Microsoft’s overall plan to neutralize Java as a middleware threat was
extremely
successful.88 As the Fourth Circuit explained in a subsequent private suit
brought by Sun
Microsystems:
First, Microsoft “embraced” the Java technology by licensing from Sun the
right
to use its Java Technology to develop and distribute compatible Products.
Second, Microsoft “extended” the Java platform by developing strategic
incompatibilities into its Java runtime and development tools products….
Third,
Microsoft used its distribution channels to flood the market with its
version of the
Java Technology in [what Sun characterized as] an attempt to “hijack the
Java
Technology and transform it into a Microsoft proprietary programming and
runtime environment.”89
15
I. Microsoft’s Elimination Of Rival Media Players
RealNetworks “is like Netscape. The only difference is we have a chance to
start
this battle earlier in the game.”
–Robert Muglia, Microsoft Senior Vice-President90
In 1997, Microsoft recognized that media players also represented a nascent
threat to its
profitable operating system monopoly. Like web browsers, media players are
middleware
products that expose APIs to software developers.91 Fearing that media players
might come to
support multimedia applications on any operating system, Microsoft took action
to eliminate the
threat.
Consistent with its previous tactics, Microsoft first embraced the leading
media player
software, designed by RealNetworks, announcing an agreement to collaborate in
streaming
media.92 The agreement encouraged RealNetworks to make its media player
Windows-dependent in return for compensation from Microsoft.93 As Robert Muglia
informed
RealNetworks’ Chief Operating Officer, “anyone who competed against [Microsoft]
in the
operating system ‘lost.’”94 When RealNetworks continued to compete against
Microsoft,95
however, Microsoft became increasingly aggressive in its actions. In
particular, as it had done
with the browser, Microsoft tied its own media player to Windows.96
RealPlayer was, however, not the only multimedia threat to Microsoft. Microsoft
took
separate action to eliminate another competitor in the multimedia space,
Burst.com, Inc.
16
(”Burst”), a developer of video delivery software.97 And, in 1997, Microsoft
targeted Apple’s
QuickTime media authoring software, another threat to Microsoft’s operating
system monopoly.
Like RealNetworks’ multimedia player, Apple’s multimedia technology ran on
several platforms
and exposed APIs to content developers.98 Microsoft saw the Apple product as a
particularly
serious threat to the applications barrier to entry in light of Apple’s
expertise in the operating
system market.99 Microsoft thus reverted to its standard playbook, first
attempting to allocate the
market with Apple by offering not to enter the authoring business if Apple
stopped developing a
Windows 95 version of QuickTime.100 When Apple refused to participate in
Microsoft’s illegal
scheme, Microsoft threatened to make its products incompatible with Apple’s
products if Apple
did not abort its work on its new QuickTime product.101 As one senior Microsoft
executive told
Apple, if Apple wanted to survive in the broader multimedia software market, it
would have to
“knife the baby” by killing its own multimedia offering.102 Again, Apple
refused Microsoft’s
proposal.103
When Microsoft first began bundling Windows Media Player with its monopoly
operating system, Microsoft also released a version of its media player for
Apple’s Mac
operating system. During the period when Windows Media Player was competing
with
RealPlayer and Apple QuickTime, Microsoft frequently released new versions of
its product for
the Mac. By 2003, however, Microsoft had gained the upper hand, capturing more
users than
17
RealNetworks and Apple.104 After 2003, Microsoft never released another Mac
version of its
media player.105 Instead, Microsoft continued to promise that it would release
a new Mac
version of Media Player until 2006, when it announced that it was terminating
the project.106
J. Microsoft’s Campaign Against Rival Server Operating Systems
“Sun, Oracle and Netscape are all pushing a new model of [almost] centralized
computing. They all acknowledge that Microsoft holds tremendous sway over the
desktop platform, so they all want to quickly strip as much value and spending
as
possible off the desktop and onto the server where they can charge premium
prices and push their own platform offerings.”
–Aaron Contorer, Microsoft C++ General Manager107
What we are trying to do is use our server control to do new protocols and lock
out Sun and Oracle specifically”
— Bill Gates, Microsoft108
In the mid to late 1990s, computer networks were growing in speed and Microsoft
sensed
a threat to its core operating system monopoly from more centralized,
server-based computing.
Determined to head off any potential competition, Microsoft decided that it
needed to add server
operating systems to the “moat” surrounding its Windows operating system
monopoly.109 To
gain inroads into this market, Microsoft embraced industry standards for
file-and-print sharing,
user management, and identity verification so that its products would be
compatible with the
then-prominent Unix server operating systems.110But as Microsoft’s server
systems started to
gain a foothold in the market, Microsoft quietly started to “extend” support
for industry standard
protocols in its Windows operating system so that Windows clients would have a
better
experience when connected to Microsoft’s servers.111 Eventually, by changing
its Windows
personal computer operating system so that Windows computers could not fully
connect to any
server that did not use Microsoft’s proprietary extensions unless the users
installed special
18
software on their machines, Microsoft established and reinforced its dominance
in the work
group server operating system market,112 where Microsoft maintains a share of
approximately
77%.113
Microsoft’s conduct eventually drew scrutiny from the European Commission,
which
condemned Microsoft’s refusal to release information that would allow other
server operating
systems to connect to personal computers running Microsoft’s Windows operating
system.114 In
a 2004 decision, the European Commission found that if Microsoft succeeded in
eliminating
other server operating systems as competitive threats, then innovation would be
severely
limited.115 And, in fact, after releasing Windows Server 2003 to lukewarm
reviews,116 Microsoft
failed to release a new server version of Windows until 2008.117 Even then,
many reviewers
noted that, despite aggressive marketing to small- and midsize-business users
and a special
edition of the server operating system just for these users, Microsoft had done
very little to
address their needs, and instead had essentially re-packaged a scaled-down
version of an existing
enterprise-level product.118
III. MICROSOFT CONTINUES TO ENGAGE IN ANTICOMPETITIVE CONDUCT
Despite international scrutiny of Microsoft’s anticompetitive conduct,
Microsoft has
continued to take similar unlawful actions to eliminate potential competitive
threats. The only
real difference between Microsoft’s more recent practices and its earlier ones
is that, as Mr.
Gates predicted, Microsoft has now changed its document retention practices.119
19
A. Microsoft’s Failure To Comply With The Final Judgment
In 2003, the DOJ discovered that Microsoft had built a feature into Windows
that
invoked Microsoft’s Internet Explorer browser, rather than the user’s chosen
default browser,
contrary to the clear obligations of the Final Judgment.120 Similarly, in 2004,
Microsoft
attempted to require licensees of its middleware offering, the .NET Framework,
to obtain
Microsoft’s prior consent before publishing any benchmark testing results for
the software.121 In
2005, Microsoft demanded that manufacturers of portable music players sign
exclusive deals if
they wanted integration with Microsoft’s Windows Media Player.122 And in 2007,
Microsoft
made changes to allow consumers limited choice of desktop search products in
Windows Vista
only following an extensive government investigation and pressure from a number
of U.S.
States. While Microsoft eventually made changes to its conduct in each of these
instances, these
incidents all demonstrate Microsoft’s willingness to use its monopoly products
aggressively first
and make changes later only when confronted about its behavior. This is
particularly striking
coming, as it does, within the very limited range of issues covered by the
Final Judgment.123 In
fact, the district court overseeing the Final Judgment extended the decree for
two more years, to
November 12, 2009, because Microsoft still has not come into compliance with
its obligations
regarding communications protocols.124
20
Even today, with its obligations under the consent decree nearing an end,
Microsoft has
begun testing the waters and taking more aggressive actions to limit the
pre-installation of
competing software by OEMs. For example, in 2008 Microsoft announced that it
would
introduce a series of diagnostic tests and requirements for any non-Microsoft
software that
OEMs wished to preinstall (Microsoft’s own equivalent software was not subject
to the tests).125
Microsoft further announced that marketing dollars it typically granted to OEMs
would be linked
to compliance with the tests.126 This announcement obviously created serious
concerns among
OEMs, ISVs, and consumer advocates. Among other things, Microsoft’s
announcement meant
that it would gain early access to competing software, and the new program
would give
Microsoft an easy tool to keep competing middleware products (for example,
browsers and
media players) from being distributed by OEMs. Steven Houck, counsel to the
California Group
of plaintiffs, told the U.S. district court at a January 2009 status conference
that: “[I]n the six
plus years that we’ve been enforcing the decree, this particular issue is one
in which we’ve
gotten the most number of complaints and heard the most anxiety about what
Microsoft is
doing.”127 In light of Microsoft’s history of anticompetitive conduct, it is
perhaps not surprising
that, with just a few months of U.S. regulatory oversight remaining, Microsoft
has once again
begun to ratchet up its anticompetitive tactics.
B. Microsoft’s Campaign of Patent FUD against Linux and Open Source
Software
“This is not a case of some accidental, unknowing infringement. There is an
overwhelming number of patents being infringed.”
— Microsoft General Counsel and Intellectual Property and Licensing Vice
President Horacio Gutierrez 128
The open source Linux operating system is the principal rival to Microsoft
Windows.
Linux has been taken up by both corporate customers and, increasingly, by
private individuals
21
for home use (e.g., with netbooks). In a recent interview with CNET, Steve
Ballmer identified
Linux as one of the top two competitive threats to Microsoft in the enterprise
segment.129
Consistent with its behavior in response to other competitive threats,
Microsoft has used
unfair and anti-competitive tactics to try and slow the uptake of Linux. In
particular, Microsoft
has made and continues to make broad, unsubstantiated claims that software
developers
distributing Linux or other open source software, as well as their customers,
are infringing
Microsoft’s patents.130 However, although Microsoft has claimed that as many as
235 patents
may have been infringed131, it has consistently failed to identify which
patents are at issue.
Microsoft’s tactic is to spread fear, uncertainty and doubt (”FUD”) as to
whether
developers and users of open source software may be the target of future patent
infringement
suits, and thereby chill consumer enthusiasm and demand for Linux and open
source solutions.
Indeed, Microsoft’s unwarranted threats have brought such pressure to bear on
Linux users that
some have felt compelled to enter into royalty-bearing patent licenses with
Microsoft.132
Microsoft’s campaign of FUD effectively works to impose a “tax” on the use of
the most viable
alternative software to Windows: faced with an intimidating and powerful
potential litigant
known for its hardball tactics, Linux users are driven to pay the licensing fee
despite the
speculative nature of the IP claims. Microsoft’s bullying tactics therefore
raise the overall cost
and slow down market penetration by innovative technologies intended to compete
with
Microsoft’s monopoly products.
Moreover, there is a strong likelihood that Microsoft’s patent FUD campaign may
be
unfounded in law. Recent U.S. jurisprudence clarifies that the scope for
patenting business
methods, which lie at the heart of many software patents, is much narrower than
was previously
thought to be the case.133 In addition, one of the thresholds for patentability
that an invention is
not obvious to a person skilled in the art has recently become harder to
meet.134 As such, many
of the patents held by Microsoft are likely to be of questionable validity
today. Furthermore,
given the myriad of software patents in existence, consumers may often be
unable to determine
with certainty whether their use or distribution of certain software products
actually infringes
another company’s IP rights. Therefore, contrary to the broad and categorical
statements of Mr.
Gutierrez as to the intentional nature of any alleged patent infringements, it
is widely recognized
in the industry that, regardless of whether proprietary or open source software
is used, there is a
22
high likelihood that patent infringements will have been committed
inadvertently. Microsoft has
sought to exploit the current absence of clarity in patent law in order to
deter consumers from
taking up offerings competing with Microsoft’s own products.
In an apparent escalation of its patent FUD strategy, Microsoft sued the
navigational
system vendor, TomTom, for patent infringement at the end of February 2009.
Three patent
claims related to Linux are included in the lawsuit.135 At least two of them
are related to highly
questionable patents on long file name support in Windows, which have been
partially
invalidated by an EC patent court on the grounds that Microsoft’s patent claims
were “not based
on inventive activity”.136 While Microsoft has publicly claimed that its action
is not directed
against Linux or open source, and the case was settled in March 2009 pursuant
to a mostly-confidential agreement, this represents an aggressive development
of Microsoft’s use of spurious
or highly questionable patent claims to intimidate and eliminate competition
from Linux in order
to maintain or strengthen its dominant position in the OS market.
C. Microsoft’s Ongoing Misconduct Has Sparked Further European
Commission Investigations
As noted at the outset, the European Commission (”EC”) is also investigating
ongoing
misconduct by Microsoft, culminating in its issuance of a Statement of
Objections to Microsoft
on January 15, 2009, concerning the tying of the Internet Explorer web browser
to the Windows
operating system.137 In addition, the EC continues to investigate a number of
other actions
Microsoft has taken to tie products to Windows as well as Microsoft’s refusal
to enable
interoperability with certain of its monopoly technologies, including
Sharepoint, Outlook,
Exchange, and Office.138 The EC is also investigating Microsoft’s actions to
manipulate the vote
of the International Organization for Standardization / International
Electrotechnical
Commission on the recent standardization of Office “Open” XML (”OOXML”). As
reported
widely in the press and on the Internet, Microsoft’s manipulation of the
standards setting process
in favor of OOXML included financial inducements, threats, misleading
information, and
committee-stuffing.139 These investigations are compelling examples of
Microsoft’s continued
misconduct related to its monopolies in operating systems and other products.
23
IV. MICROSOFT’S FALSE PROMISES OF INTEROPERABILITY
Although Microsoft has repeatedly promised to support open standards, both with
its
recent “Interoperability Principles”140 and its announcements for Internet
Explorer 8,141
Microsoft has routinely made similar promises of standards support in the past
without fulfilling
them.142 As a result, many observers have greeted Microsoft’s various
announcements and
orchestrated fanfare with skepticism. For example, following one recent
Microsoft
interoperability announcement, the European Commission released a short
statement noting that
Microsoft’s promise of interoperability followed “at least four similar
statements by Microsoft in
the past on the importance of interoperability.”143 As the Commission observed,
it took
Microsoft three years even to approach releasing the amount of interoperability
information the
European Court of First Instance had ordered it to release.144
Even when Microsoft claims to be implementing a standard, the reality is that
Microsoft’s
implementations routinely either only partially conform or else somehow extend
the standard, so
that software developed to work with Microsoft’s version of the standard will
not work with
other vendors’ implementations of the same standard. As just one example,
Microsoft recently
announced that Internet Explorer 8 would support a feature called “local
storage,” which allows
websites to store a limited amount of data on users’ computers so that users
can interact with
those sites offline, a feature that could help web applications become
effective replacements for
traditional desktop applications.145 This feature is part of HTML 5, the next
version of the
24
HTML standard used for writing web pages.146 Unfortunately, Microsoft’s
implementation is
subtly incompatible with the standard, which could lead web developers who test
their sites in
Internet Explorer 8 to write their sites in a way that will not work in other
browsers.147 Other,
earlier examples of this conduct include Microsoft’s approach to the Windows
graphical user
interface (discussed in section II.A) and Microsoft’s approach to Java
developer tools (discussed
in section II.H). Again, these are just a few examples of Microsoft’s hollow
interoperability
promises. Microsoft’s history clearly demonstrates its longstanding practice of
making one set
of statements about interoperability in public and then implementing a wholly
different approach
to interoperability in practice.
V. MICROSOFT’S MONOPOLIES HAVE HARMED CONSUMERS
Microsoft’s conduct has allowed it to protect its monopolies, which has led to
a lack of
choice, higher prices, and less innovation than would otherwise have prevailed
in a competitive
marketplace. The barriers to entry surrounding Microsoft’s core monopolies
remain very high,
and Microsoft’s market shares and profit margins in desktop operating systems,
office
productivity suites, and browsers have continued to reflect its overwhelming
monopoly power in
these markets.148 In short, Microsoft’s misconduct has harmed and continues to
harm consumers
significantly.
A. Microsoft’s Operating System Monopoly Has Harmed Consumers
For fifteen years, Microsoft’s share of desktop operating systems has remained
above 90%. 149
In 2002, when the Final Judgment in United States v. Microsoft was entered,
Windows
XP was the most common desktop operating system.150 Microsoft did not release a
successor to
Windows XP until 2007, when it released Windows Vista.151 Even then,
the “Vista” that
25
Microsoft released lacked the most significant features that Microsoft had
initially promised, and
reviewers labeled it as little more than an incremental improvement.152 CNet
News, a leading
computer industry publication, ranked Microsoft’s Windows Vista in its “Top Ten
Terrible Tech
Products.”153 Even Microsoft recognizes that its stronghold on operating
systems has harmed
consumers:
The Windows API is … so deeply embedded in the source code of many Windows
apps that there is a huge switching cost to using a different operating
system
instead. … It is this switching cost that has given customers the patience
to stick
with Windows through all our mistakes, our buggy drivers, our high TCO, our
lack of a sexy vision at times, and many other difficulties… Customers
constantly
evaluate other desktop platforms, [but] it would be so much work to move
over
that they hope we just improve Windows rather than force them to move. In
short,
without this exclusive franchise called the Windows API, we would have been
dead a long time ago.154
Microsoft’s tactics to prolong its operating system monopoly through means
other than
competition on the merits go hand-in-hand with its admitted lack of innovation.
B. Microsoft’s Office Monopoly Has Harmed Consumers
Microsoft’s Office suite likewise maintains a 95% market share.155 The standard
Office
suite includes Word (word processing software), Excel (spreadsheets),
PowerPoint
26
(presentations), and Outlook (desktop email client),156 all of which are the de
facto standards in
their respective categories.157 Microsoft has more than 500 million Office
users.158 The business
division at Microsoft, which includes Office, operated on a profit margin of
65% and brought in
almost $19 billion in revenue in 2008.159
Microsoft’s monopoly power in office productivity applications has, likewise,
bred
complacency that is harmful to consumers. Even Microsoft’s founder and former
Chief Software
Architect, Bill Gates, asserts that the only real competitive pressure on
Microsoft to improve
Office today is that consumers might not upgrade to the next version.160
Between 1997 and
2007, Microsoft released only three new versions of Microsoft Office, a very
slow pace by
software industry standards, and reviewers noted that each release offered only
small
improvements over the previous ones.161 It was not until 2007, with the advent
of competing
27
online office productivity applications,162 that Microsoft redesigned the
Office user interface and,
not coincidentally, introduced new, incompatible file formats.163
C. Microsoft’s Web Browser Monopoly Has Harmed Consumers
For the past decade, Microsoft has maintained a dominant share in the web
browser
market.164 Since Microsoft’s success in exterminating Netscape, however, it has
invested little in
developing its Internet Explorer web browser. During Microsoft’s push to
destroy Netscape, it
released four major new versions of Internet Explorer in two years.165 But
after it successfully
excluded Netscape from the market, Microsoft slowed browser development,
releasing only two
new versions between 1998 and 2001, neither of which was a major upgrade.166
After 2001,
28
Microsoft “effectively disbanded the Internet Explorer group after killing
Netscape.”167
Microsoft did not introduce a new version of Internet Explorer for Windows
until 2006, and even
then reviewers labeled the new version as an underwhelming catch-up release.168
One of
Microsoft’s .NET program managers acknowledged that “[i]t simply doesn’t make
business
sense for Microsoft to invest in a technology that d[is]intermediates [its]
most popular platform,
the Windows operating system.”169 As one analyst summarized the issue:
The Web browser is probably the most frequently used category of software
in the
world. But in recent years, the browser most people rely on–Microsoft’s
Internet
Explorer–has been stagnant, offering very few new features.
This is a common pattern with Microsoft. The company is aggressive about
improving its software when it first enters a market. But once it crushes
its
competitors and establishes an effective monopoly, as it has in Web
browsers,
Microsoft seems to switch off significant innovation.170
Yet despite Microsoft’s lack of innovation in the browser market, it has been
able to
maintain its enormous market share.171 Even strikingly superior web browsers
like Opera and
Mozilla’s Firefox have had great difficulty in gaining widespread adoption.
After having been
29
starved of innovation by Microsoft for years, technology-savvy jumped at the
chance to adopt
Firefox upon its release, and reviewers generally identify Firefox (and other
browsers including
Opera) as far superior to Internet Explorer.172 Yet, despite their superiority,
no major OEM has
ever distributed any of these alternative, innovative browsers.173 Thus, while
IE is guaranteed
ubiquity as a result of Microsoft’s tying practice, rival browsers face high
barriers to entry even
if they are technically superior. Beyond their popularity with a limited set of
sophisticated
consumers, alternative browsers have not been able to make significant
inroads.174 This means
that most consumers have gone without features like tabbed browsing and
improved security
features for years longer than they would have done in a competitive
marketplace.175
Microsoft’s persistently high market share despite its noticeably inferior
product is proof that
OEMs are not selecting web browsers based on consumer demand.
Microsoft’s anticompetitive conduct in the browser market has also firmly
entrenched
Internet Explorer as the super-dominant web browser in the workplace. Among
other things,
during the years after Microsoft exterminated Netscape and before Firefox came
on the scene,
many corporate information technology departments built applications and
company intranets on
30
top of proprietary Microsoft technologies in Internet Explorer. These companies
would face
significant barriers to switching to a different browser today.176
VI. CONCLUSION
Microsoft’s conduct over the last two decades has demonstrated Microsoft’s
willingness
and ability to engage in unlawful conduct to protect and extend its core
monopolies. This
conduct has caused real harm to consumers, who continue to pay high prices and
use lower
quality products than would have prevailed in a competitive market. By
understanding
Microsoft’s history of anticompetitive conduct, developers, consumer groups,
and government
authorities will be better equipped to recognize current and future Microsoft
misconduct at an
early stage and intervene to prevent Microsoft from using tactics other than
competition on the
merits. ECIS remains hopeful that the European Commission’s latest Statement of
Objections
addressing Microsoft’s misconduct will finally mark the beginning of the end of
Microsoft’s two
decades of anticompetitive behavior and consumer harm.
31
1
Press Release, European Commission, Antitrust: Commission Confirms Sending a
Statement of Objections to
Microsoft on the Tying of Internet Explorer to Windows (Jan. 17, 2009),
available at
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/15.
2
For a similar view by Microsoft’s only significant rival in the browser market,
see Mitchell Baker, Chairperson,
Mozilla Foundation, The European Commission and Microsoft, Mitchell’s Blog,
Feb. 6, 2009,
http://blog.lizardwrangler.com/2009/02/
06/the-european-commission-and-microsoft/ (reflecting on the EC’s
most recent Statement of Objections and noting that “Microsoft’s business
practices have fundamentally
diminished (in fact, came very close to eliminating) competition, choice and
innovation in how people access
the Internet”).
3
Government Exhibit 940, Handwritten Notes of Intel’s Steven McGeady, United
States v. Microsoft, 87 F.
Supp. 2d 30 (D.D.C. 2000) (No. 98-1232),available at
http://www.usdoj.gov/atr/cases/exhibits/940.pdf; see
also Transcript of the Direct Examination of Intel’s Steven McGeady, Nov. 10,
1998, at 18:820:6, United
States v. Microsoft, 87 F. Supp. 2d 30 (D.D.C. 2000) (No. 98-1232), available
at http://cyber.law.harvard.edu/
msdoj/trial.html (”November 10, a.m.” link) (testifying that Mr. Gates further
indicated the one thing Microsoft
might change was its document retention policies).
4
See United States v. Microsoft Corp., 253 F.3d 34, 54-58 (D.C. Cir. 2001); see
also Competition on the Internet:
Hearing of the House Competition Policy and Antirust Laws Task Force of the
House Judiciary Committee,
110th Cong. 49 (2008) (remarks of Bradford L. Smith, Senior Vice President,
General Counsel and Corporate
Secretary, Microsoft Corporation) (acknowledging that as of July 2008, “we know
that we have a dominant
position, for example, in the market for personal computer operating systems”).
5
See Microsoft Corp., Annual Report (Form 10-K), at 20, 23, 26 (Jul. 31, 2008),
available at
http://idea.sec.gov/Archives/edgar/data/789019/
000119312508162768/d10k.htm.
6
See id. at 23, 26.
7
United States v. Microsoft Corp., 253 F.3d 34, 55 (D.C. Cir. 2001) (internal
citations omitted).
8
Novell, Inc. v. Microsoft Corp., No. JFM-05-1087, 2005 U.S. Dist. LEXIS 11520,
at *6 (D. Md. June 10, 2005)
(quoting email from Jeff Raikes at Microsoft to Warren Buffet at Berkshire
Hathaway (Aug. 17, 1997)).
9
United States v. Microsoft Corp., 253 F.3d 34, 53 (D.C. Cir. 2001) (”If
middleware were written for multiple
operating systems, its impact could be even greater…. Ultimately, if developers
could write applications relying
exclusively on APIs exposed by middleware, their applications would run on any
operating system on which the
middleware was also present.”).
10
Consolidated Statement of Facts in Support of Its Responses to Motions for
Summary Judgment by Microsoft
Corporation ¶ 246, Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295 (D.
Utah 1999) (No. 2:96-CV-645 B).
11
Id. ¶ 251.
12
See Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1298 (D. Utah 1999).
The disk operating system
was one of the earliest operating systems developed for computers, controlling
the computer’s interaction with
other software through a command-based standard. See id. at 1297.
13
See Jon Pepper, Like MS-DOS, Only Better, SOFTWARE MAG., Oct. 1990,
http://findarticles.com/p/articles/
mi_m0SMG/is_n12_v10/ai_9560823.
14
See Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1298 (D. Utah 1999).
15
See id.
16
See id.
17
See id. at 1303.
18
See Direct Examination of Steven McGeady, Vice President of Intel, at 5354,
United States v. Microsoft Corp.,
87 F. Supp. 2d 30 (D.D.C. 2000) (No. 98-1232), available at
http://cyber.law.harvard.edu/
msdoj/transcripts/1109b.doc (testifying that a Microsoft executive used the
phrase
“embrace, extend and extinguish” in a 1995 meeting to describe Microsoft’s
strategies towards its competitors).
19
See, e.g., United States v. Microsoft Corp., 253 F.3d 34, 7475 (D.C. Cir. 2001)
(”Microsoft, too, agreed to
promote the Java technologies–or so it seemed…. Microsoft made a large
investment of engineering resources
to develop a high-performance [Java implementation].” (internal quotations
omitted)).
20
See Findings of Fact ¶¶ 38790, United States v. Microsoft Corp., 84 F. Supp. 2d
9 (D.D.C. 1999) (98-1232)
[hereinafter "Findings of Fact"], available at http://
www.usdoj.gov/atr/cases/f3800/msjudge.pdf. Microsoft’s
Thomas Reardon urged, “[W]e should just quietly grow j++ [Microsoft's [Java]
developer tool] share and
assume that people will take more advantage of our classes without ever
realizing they are building win32-only
java app[lication]s.” Id. ¶ 394.
21
See id. ¶ 390 (”Far from being the unintended consequence of an attempt to help
Java developers more easily
develop high-performing applications, incompatibility was the intended result
of Microsoft’s efforts.”).
22
Graham Lea, Unsealed Caldera Documents Expose MS’ DR-DOS Moves, THE REGISTER
UK, May 24, 1999,
http://www.theregister.co.uk/1999/05/24/
unsealed_caldera_documents_expose_ms/.
23
See Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1303 (D. Utah 1999).
Internal discussions at
Microsoft revealed a strategy to make Windows 3.1 incompatible with DR-DOS. Id.
at 1313 (citing an email in
which two Microsoft top executives instructed employees to “make sure [DR-DOS]
has problems in the
future”).
24
See id. at 1311. Microsoft included a “Readme” text file in Windows 3.1 that
stated that “running Microsoft
Windows 3.1 with an operating system other than MS-DOS could cause unexpected
results or poor
performance.” Kenneth C. Baseman, Frederick R. Warren-Boulton, and Glenn A.
Woroch, Microsoft Plays
Hardball: The Use of Exclusionary Pricing and Technical Incompatibility to
Maintain Monopoly Power in
Markets for Operating System Software, ANTITRUST BULL., Summer 1995, at 13,
available at
http://elsa.berkeley.edu/~woroch/hardball.pdf; see also Andrew Schulman, The
Caldera v. Microsoft Dossier,
O’REILLY NETWORK, Feb. 7, 2000,
http://www.oreillynet.com/pub/a/network/2000/02/07/schulman.html
(Microsoft “allegedly leveraged its Windows monopoly to crush” DR-DOS
by “including intentionally
misleading product pre-announcements, vaporware and FUD (’fear, uncertainty,
and doubt’) announcements,
exclusionary licensing, beta-test blacklists, building deliberate
incompatibilities into Windows to hinder it from
running with DR-DOS, and trying to create the misperception that DR-DOS
couldn’t work properly with
Windows.”).
25
Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1303 (D. Utah 1999). For
example, Microsoft
executives began conducting interviews with trade press to highlight the issue.
Microsoft Vice President Brad
Silverberg asked rhetorically in one interview: “Why take the risk with all the
compatibility problems that DR-
DOS has had?” See Consolidated Statement of Facts in Support of Its Responses
to Motions for Summary
Judgment by Microsoft Corporation ¶ 383, Caldera, Inc. v. Microsoft Corp., 72
F. Supp. 2d 1295 (D. Utah
1999) (No. 2:96-CV-645 B).
26
See Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1304 (D. Utah 1999).
Caldera, the owner of DR-DOS, filed suit against Microsoft in 1996 and, after
the district court denied Microsoft’s motions for summary
judgment, Microsoft settled the case for an undisclosed amount. See Andrew
Schulman, The Caldera v.
Microsoft Dossier, O’REILLY NETWORK, Feb. 7, 2000,
http://www.oreillynet.com/pub/a/network/2000/
02/07/schulman.html.
27
Dan Goodin, Microsoft Defends DOS Licensing, CNET NEWS, May 27, 1999,
http://www.news.com/2100-1001-226467.html.
28
See United States v. Microsoft Corp., 56 F.3d 1448, 1451 (D.C. Cir. 1995);
Complaint ¶ 26, United States v.
Microsoft Corp., No. 94-1564 (D.D.C. July 15, 1994), available at
http://www.usdoj.gov/atr/cases/f0000/0046.htm.
29
See Final Judgment, United States v. Microsoft Corp., No. 94-1564, 1995 U.S.
Dist. LEXIS 20533, at *8
(D.D.C. Aug. 21, 1995), available at
http://www.usdoj.gov/atr/cases/f0000/0047.htm. Section § IV(C) of the
court’s order prohibits Microsoft from entering into per processor licenses.
Id.
30
See United States v. Microsoft Corp., 56 F.3d 1448, 145152 (D.C. Cir. 1995);
Complaint ¶ 36(b)-(c), United
States v. Microsoft Corp., No. 94-1564 (D.D.C. July 15, 1994), available at
http://www.usdoj.gov/atr/cases/f0000/0046.htm (describing how these licensing
practices deprived competitors
of sales).
31
Reply Brief of Petitioner United States of America at 5, United States v.
Microsoft Corp., 147 F.3d 935 (D.C.
Cir. 1998) (No. 94-1564), available at http://www.usdoj.gov/
atr/cases/f1200/1277.htm.
32
Findings of Fact, supra note 20, ¶ 126.
33
See id. ¶ 116. Microsoft refused to license Windows 95 to IBM under the guise
of an audit of IBM’s past
royalty payments. Id. ¶ 122. Joachim Kempin, Microsoft’s executive in charge of
sales to OEMs, offered to
close the audit if IBM agreed not to bundle its office productivity suite with
its PCs. Id. ¶ 124. IBM refused
and it was not granted a license to pre-install Windows 95 until fifteen
minutes before the start of Microsoft’s
official product launch. Id. ¶ 125.
34
Id. ¶ 126.
35
Id. ¶ 128.
36
See Press Release, Microsoft, Microsoft and IBM Resolve Antitrust Issues (July
1, 2005), available at
http://www.microsoft.com/presspass/
press/2005/jul05/07-01msibmsettlepr.mspx.
37
Government Exhibit 276, Email from Bill Gates, United States v. Microsoft, 87
F. Supp. 2d 30 (D.D.C. 2000)
(No. 98-1232), available at http://www.usdoj.gov/atr/
cases/exhibits/276.pdf.
38
See Findings of Fact, supra note 20, ¶¶ 10102.
39
Id. ¶ 103.
40
See id. ¶ 101. Microsoft’s leverage over the OEMs forced Intel to abandon its
software development ambitions.
In relating the success of the OEM boycott to Microsoft executives, Gates
added, “we should let OEMs know
that some of the new software work Intel is doing is OK. If Intel is not
sticking totally to its part of the deal let
me know.” Id. ¶ 103.
41
Id. ¶ 406.
42
See id. ¶ 406.
43
Novell, Inc. v. Microsoft Corp., No. JFM-05-1087, 2005 U.S. Dist. LEXIS 11520,
at *6 (D. Md. June 10, 2005)
(quoting email from Jeff Raikes at Microsoft to Warren Buffet at Berkshire
Hathaway (Aug. 17, 1997)).
44
Transcript of the Deposition of Microsoft Chairman Bill Gates, Sept. 2, 1998 at
662:7-13, United States v.
Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (No. 98-1232), available at
http://www.washingtonpost.com/
wp-srv/business/longterm/microsoft/documents/gates0902p4.htm; see also
Dave Methvin, Novell Hasn’t Forgotten Microsoft’s Jab At WordPerfect, INFO.
WK., Mar. 19, 2008,
http://www.informationweek.com/blog/
main/archives/2008/03/novell_hasnt_fo.html.
45
See Complaint ¶¶ 56, 6972, Novell, Inc. v. Microsoft Corp., No. JFM-05-1087,
2005 U.S. Dist. LEXIS 11520
(D. Md. June 10, 2005).
46
See id. ¶¶ 8494.
47
See id. ¶ 112.
48
See id. ¶ 117.
49
See id. ¶ 55.
50
Fred Vogelstein, Search and Destroy, FORTUNE, May 2, 2005, at 74, available at
http://money.cnn.com/
magazines/fortune/fortune_archive/2005/05/
02/8258478/index.htm (showing
“Microsoft’s Battles” market share graphics). In 1993, WordPerfect accounted
for more than 40% of word
processing software sales, with annual sales of $700 million. See Complaint ¶
150, Novell, Inc. v. Microsoft
Corp., No. JFM-05-1087, 2005 U.S. Dist. LEXIS 11520 (D. Md. June 10, 2005). By
1996, WordPerfect’s
share of sales had dropped to less than 10%, with annual sales of only $200
million. See id.
51
Steve Lohr, In an Antitrust Suit, a Tiny Ex-Partner Is Taking Aim at Microsoft,
N.Y. TIMES, May 31, 1999,
http://query.nytimes.com/gst/fullpage.html?res=
940DE7D81530F932A05756C0A96F958260.
52
Case COMP/C-3/37.792 Microsoft, Commission Decision Mar. 24, 2004, ¶ 575,
available at
http://ec.europa.eu/comm/competition/
antitrust/cases/decisions/37792/en.pdf (citing Microsoft internal e-mail
from Mark Ryland to Jim Allchin, dated April 18, 1996) [hereinafter "EC
Decision"].
53
Id.
54
See Bristol Tech., Inc. v. Microsoft Corp., 114 F. Supp. 2d 59, 6465 (D. Conn.
2000); John Lettice, How
Microsoft Used the WISE Trojan Horse Against Unix, THE REGISTER, July 18, 1999,
http://www.theregister.co.uk/
1999/07/18/
analysis_how_ms_used/ (”Microsoft had originally identified WISE as
a mechanism which would help it get [Windows] NT established in corporate
networks. In the early days of the
OS Microsoft needed to accept that there would be co-existence (NT’s market
share was then vanishingly
small), so WISE was useful. It also acted as a mechanism for controlling that
coexistence. Microsoft then saw
Sun-backed efforts such as WABI and PWI as real threats that could wrest
control of Windows APIs from it, so
it favoured WISE as an ‘official,’ controllable version.”).
55
See Bristol Tech., Inc. v. Microsoft Corp., 114 F. Supp. 2d 59, 7374 (D. Conn.
2000). Internal Microsoft
communications explained that “[t]he risk of going cross-platform with our
server technology” i.e., permitting
developers to port application seamlessly between Windows NT and UNIX or
Macintosh “is that we might
undermine the market for NT.” Id. at 71.
56
See id. at 7274. Although Microsoft had internally decided to limit the
software source code, in 1996 Bill
Gates delivered a keynote address at the UNIX Expo meant to ensure confidence
in the WISE program and
stressing that the WISE developers had the “very latest Windows API
technology.” Id. at 73.
57
Id. at 74.
58
Id. at 83. This judgment was later vacated after the parties settled and
Microsoft paid an undisclosed sum.
Microsoft Corp. v. Bristol Tech., Inc., 250 F.3d 152, 15354 (2d Cir. 2001)
(noting that the settlement
agreement was reached in part with Bristol’s promise that it would not oppose
Microsoft’s motion to vacate the
district court’s order).
59
Press Release, Department of Justice, Statement by Assistant Attorney General
Joel I. Klein: Filing of Antitrust
Suit Against Microsoft at 2 (May 18, 1998), available at
http://www.usdoj.gov/atr/public/press_releases/
1998/1770.htm; see also Plaintiffs’ Joint Proposed Findings of
Fact ¶ 91.3.1, United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C.
2000) (No. 98-1232), available at
http://www.usdoj.gov/atr/
cases/f2600/2613-1.htm [hereinafter "Plaintiffs' Joint Proposed Findings of
Fact"].
60
See Findings of Fact, supra note 20, ¶¶ 8183. At a meeting between Microsoft
and Netscape executives,
Microsoft made it clear that if Netscape attempted to expose its own APIs
rather than build off of Microsoft’s
platform, “Microsoft would view Netscape as a competitor, not a partner.” Id. ¶
83.
61
Plaintiffs’ Joint Proposed Findings of Fact, supra note 49, ¶ 91.3.1, United
States v. Microsoft Corp., 87 F.
Supp. 2d 30 (D.D.C. 2000) (No. 98-1232), available at http://www.usdoj.gov/atr/
cases/f2600/2613-1.htm.
62
See United States v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001).
63
Findings of Fact, supra note 20, ¶ 160. Microsoft did this by placing code
specific to web browsing in the same
files as code that provided operating system functionality. Id. ¶ 161. The
district court found that “Microsoft’s
primary motivation for this action was to ensure that the deletion of any file
containing browser-specific
routines would also delete vital operating system routines and thus cripple
Windows 95.” Id. ¶ 164.
64
The district court found that “no other distribution channel for browsing
software even approaches the
efficiency of OEM pre-installation and IAP bundling.” Id. ¶ 145. Microsoft,
with the exception of a few
months in 1997, never allowed OEMs to ship Windows 95 or Windows 98 without
Internet Explorer. Id. ¶ 202.
By 1998, Netscape was only being shipped on four of the sixty OEM sub-channels.
Id. ¶ 239.
65
See id. ¶¶ 34151.
66
Id. ¶ 344.
67
Id. ¶ 346.
68
Government Exhibit 268, Email from Don Bradford, United States v. Microsoft
Corp., 87 F. Supp. 2d 30
(D.D.C. 2000) (No. 98-1232), available at http://
www.usdoj.gov/atr/cases/exhibits/268.pdf.
69
Findings of Fact, supra note 20, ¶ 352.
70
See Paul Festa, IE 5.5 Angers Web Standards Advocates, CNET NEWS, July 13,
2000,
http://www.news.com/2100-1023-243144.html.
71
See Java Gets a Run for Its Money, CNET NEWS, Mar. 12, 1996,
http://www.news.com/2100-1023-
207269.html.
72
Fred Vogelstein, Search and Destroy, FORTUNE, May 2, 2005, at 74, available at
http://money.cnn.com/magazines/
fortune/fortune_archive/2005/05/02/8258478/index.htm (showing
“Microsoft’s Battles” market share graphics).
73
Findings of Fact, supra note 20, ¶ 377.
74
Id. ¶ 377.
75
See United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). It also
served as the basis for a private
lawsuit brought by AOL Time Warner, Netscape’s parent company, which Microsoft
settled for $750 million.
See Press Release, Microsoft Corp., AOL Time Warner and Microsoft Agree to
Collaborate on Digital Media
Initiatives and Settle Pending Litigation (May 29, 2003), available at
http://www.microsoft.com/presspass/
press/2003/may03/05-29msaolsettlementpr.mspx.
76
See United States v. Microsoft Corp., 87 F. Supp. 2d 30, 3751 (D.D.C. 2000);
see also United States v.
Microsoft Corp., 253 F.3d 34, 6162, 6466, 7072, and 7374 (D.C. Cir. 2001)
(finding that Microsoft’s OEM
license restrictions, its tying of Internet Explorer to Windows, and its
exclusive dealing contracts with Internet
Access Providers (”IAPs”), Independent Software Vendors (”ISVs”), and Apple
Computer were all
anticompetitive actions that violated the Sherman Act).
77
See, e.g., California Group’s Report on Remedial Effectiveness at 15 (Aug. 30,
2007), New York v. Microsoft
Corp., 224 F. Supp. 2d 76 (D.D.C. 2002) (No. 98-1232), available at
http://www.naag.org/assets/
files/pdf/antitrust.2007-08-30_Filed_
CA_Group_Effectiveness_Report.pdf.
(”There can be little doubt that Microsoft’s market power remains undiminished
and that key provisions of the
Final Judgment those relating to middleware have had little or no competitively
significant impact. One can
fairly ask what impact the Final Judgment has had on Microsoft apart from the
cost of developing the still
delayed Technical Documentation that would cause it to refrain from engaging in
similar conduct with respect
to whatever competitive threat might arise in the future. Consequently, the
California Group respectfully
submits, Microsoft’s commingling violation has not been effectively addressed,
Microsoft remains in possession of the fruits of its violation, and the
competitive conditions antedating Microsoft’s anticompetitive
conduct have not been restored.”); Tunney Act Comments of Professor Einer
Elhauge on the Proposed
Settlement Between the United States and Microsoft at 7 (Jan. 27, 2002), United
States v. Microsoft, 87 F.
Supp. 2d 30 (D.D.C. 2000) (No. 98-1232), available at
http://www.usdoj.gov/atr/cases/
ms_tuncom/major/mtc-
00027209.pdf (criticizing the decree and noting that it would do “nothing
effective about technological
foreclosure”); U.S. v. Microsoft: The Experts, The View From Outside: Assessing
the Wisdom of a Breakup,
NEW YORK TIMES, Apr. 30, 2000, available at
http://query.nytimes.com/gst/fullpage.html?res=
9502EFDA1439F933A05757C0A9669C8B63 (quoting Steven
Salop, Professor at Georgetown University Law Center and consultant to the DOJ
in the first action against
Microsoft, in discussing the Microsoft decree: “Conduct remedies are
particularly difficult to enforce against a
company bent on exploiting any loopholes”); Carl Shapiro, Microsoft: Remedial
Failure, ANTITRUST LAW
JOURNAL, at 18 (forthcoming), available at
http://faculty.haas.berkeley.edu/shapiro/microsoft2008.pdf
(”Unfortunately, the Final Judgment [in United States v. Microsoft] has done
little, if anything, to lower the
entry barriers facing these threats [to Windows].”).
78
Government Exhibit 259, United States v. Microsoft Corp., 87 F. Supp. 2d 30
(D.D.C. 2000) (No. 98-1232),
available at http://www.usdoj.gov/atr/
cases/exhibits/259.pdf.
79
Government Exhibit 1332, United States v. Microsoft Corp., 87 F. Supp. 2d 30
(D.D.C. 2000) (No. 98-1232),
available at http://www.usdoj.gov/atr/
cases/exhibits/1332.pdf.
80
See United States v. Microsoft Corp., 253 F.3d 34, 7578 (D.C. Cir. 2001)
(finding that Microsoft’s
exclusionary agreements with ISVs, its deceptive conduct as it related to Java
developer tools, and its threats to
Intel to stop supporting Java were all anticompetitive measures taken to
protect Microsoft’s operating system
monopoly). Sun brought a private antitrust action against Microsoft, which
Microsoft settled for $700 million.
Press Release, Microsoft, Microsoft and Sun Microsystems Enter Broad
Cooperation Agreement; Settle
Outstanding Litigation (Apr. 2, 2004), available at
http://www.microsoft.com/presspass/
press/2004/apr04/04-
02SunAgreementPR.mspx.
81
See, e.g., JavaSoft Ships Java 1.0, AllBusiness.com, Jan. 23, 1996, available
at
http://www.allbusiness.com/
technology/software-services-applications/7190655-1.html.
82
See, e.g., United States v. Microsoft Corp., 253 F.3d 34, 7475 (D.C. Cir. 2001)
(”Microsoft, too, agreed to
promote the Java technologies–or so it seemed…. Microsoft made a large
investment of engineering resources
to develop a high-performance [Java implementation].” (internal quotations
omitted)) .
83
See id. at 76 (”Microsoft’s Java implementation included … certain keywords and
compiler directives that
could only be executed properly by Microsoft’s version of the Java runtime
environment for Windows … [and
produced] Java applications that [ran] only on Windows.”(internal quotations
omitted)); id. at 7677
(”Microsoft’s ultimate objective was to thwart Java’s threat to Microsoft’s
monopoly in the market for
operating systems. One Microsoft document, for example, states as a strategic
goal: `Kill cross-platform Java
by grow[ing] the polluted Java market.’”).
84
See id. at 76 (observing that “developers who relied upon Microsoft’s public
commitment to cooperate with Sun
and who used Microsoft’s tools to develop what Microsoft led them to believe
were cross-platform applications
ended up producing applications that would run only on the Windows operating
system”).
85
Government Exhibit 518, Email from Ben Slivka, United States v. Microsoft
Corp., 87 F. Supp. 2d 30 (D.D.C.
2000) (No. 98-1232), available at http://www.usdoj.gov/
atr/cases/exhibits/518.pdf.
86
See Findings of Fact, supra note 20, ¶¶ 396, 401.
87
United States v. Microsoft Corp., 253 F.3d 34, 77 (D.C. Cir. 2001) (quoting
Findings of Fact, supra note 20,
¶¶ 40405).
88
See Alex Iskold, Java: A Retrospective, READWRITEWEB, Oct. 19, 2007,
http://www.readwriteweb.com/
archives/java_a_retrospective.php.
89
In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 523 (4th Cir. 2003).
90
Government Exhibit 1576, Email from Jim Durkin, United States v. Microsoft
Corp., 87 F. Supp. 2d 30 (D.D.C.
2000) (No. 98-1232), available at
http://www.usdoj.gov/atr/cases/exhibits/1576.pdf.
91
See Findings of Fact, supra note 20, ¶ 78. “RealNetworks’ streaming software
presents a set of APIs that
competes for developer attention with APIs exposed by the streaming
technologies in Microsoft’s DirectX.” Id.
¶ 111.
92
See EC Decision, supra note 52, ¶ 305; see also Findings of Fact, supra note
20, ¶ 111 (finding that Microsoft
viewed RealNetworks’ streaming software “as competitive technology that could
develop into part of a
middleware layer that could, in turn, become broad and widespread enough to
weaken the applications barrier to
entry”); id. ¶ 114 (”Still, Microsoft’s intentions toward RealNetworks in
1997 … show that decision-makers at
Microsoft were willing to invest a large amount of cash and other resources
into securing the agreement of other
companies to halt software development that exhibited discernible potential to
weaken the applications
barrier”).
93
Id. ¶ 113.
94
Plaintiffs’ Joint Proposed Findings of Fact, supra note 49, ¶ 84.2 ii.
95
See Findings of Fact, supra note 20, ¶ 114 (noting that RealNetworks planned to
continue developing
competing streaming technologies).
96
See EC Decision, supra note 52, ¶ 844. The EC Decision noted that “[t]hrough
tying [Windows media player
("WMP")] with Windows, Microsoft ensure[d] that WMP is as ubiquitous on PCs
worldwide as Windows is.
No other distribution mechanism or combination of distribution mechanisms
attain[ed] this universal
distribution.” Id. The EC further found that “[t]hrough tying WMP, Microsoft
thus create[d] a [network effect]
reminiscent of the one that propelled Windows to its quasi-monopoly position in
the client PC operating system
market.” Id. ¶ 882. RealNetworks later filed an antitrust suit against
Microsoft, which Microsoft settled for
$761 million. Press Release, Microsoft, Microsoft and RealNetworks Resolve
Antitrust Case and Announce
Digital Music and Games Partnership (Oct. 11, 2005), available at
http://www.microsoft.com/presspass/
press/2005/oct05/10-11MSRealPR.mspx.
97
See Complaint, Burst.com, Inc. v. Microsoft Corp., No. JFM-02-cv-2952, MDL
Docket No. 1332 (D. Md.
dismissed Mar. 11, 2005). Microsoft changed published Windows APIs that Burst’s
products were using and
told third parties that Burst’s products did not work well on Windows. Id. ¶
29. It then provided Burst with a
series of purported solutions to the problem Microsoft had intentionally
created, knowing that those solutions
were ineffective. Id. Burst brought suit, but its suit was frustrated by
Microsoft’s destruction of key
documents. See Eriq Gardner, First Bill, Now Steve, IP LAW & BUS., Apr. 2006,
http://www.burst.com/new/
newsevents/
articles/IP%20Law&Business.htm. Burst introduced evidence of
Microsoft’s spoliation of evidence, including a 1995 “do-not-save-e-mail
directive” and a “30-Day E-Mail
Destruction Rule” promulgated by Jim Allchin, Microsoft Group Vice President of
platforms. Id. Allchin’s
directive told employees, “Do not archive your mail. Do not be foolish. 30
days.” Id. The suit was settled for
a reported $60 million just before a hearing on Burst’s spoliation claim. Id.;
see also Robert Cringely, Bursted
Not Busted: Burst Really Did Win Its Case With Microsoft and Here’s Why, I,
CRINGELY, Mar. 17, 2005,
http://www.pbs.org/cringely/pulpit/
2005/pulpit_20050317_000846.html (positing that “Microsoft’s immediate
motivation to settle was the spoliation hearing that could have exposed the
company to older cases being re-opened based on the possibility that Microsoft
had deliberately destroyed evidence”).
98
See Findings of Fact, supra note 20, ¶ 78.
99
See id. ¶ 104. The district court found that “QuickTime competes with
Microsoft’s own multimedia
technologies, including Microsoft’s multimedia APIs (called ‘DirectX’) and its
media player. Because
QuickTime is cross-platform middleware, Microsoft perceives it as a potential
threat to the applications barrier
to entry.” Id. ¶ 104.
100
See id. ¶ 105. The specific market allocation proposals discussed herein are
only the ones that have come to
light through subsequent litigation, and it is highly probable that Microsoft
has made market allocation
proposals to other nascent competitors that simply have not come to light, or
at least have not come to public
attention.
101
See id. ¶ 106.
102
Plaintiffs’ Joint Proposed Findings of Fact, supra note 49, ¶ 79.2 ii.
103
See Findings of Fact, supra note 20, ¶ 109. As the district court
noted, “Microsoft’s motivation was its desire to
limit as much as possible the development of multimedia content that would run
cross-platform.” Id. ¶ 110.
104
Kevin J. O’Brien, As EU Debated, Microsoft Took Market Share, INT’L HERALD
TRIB., Sept. 16, 2007,
http://www.iht.com/articles/
2007/09/16/news/msft17.php.
105
See Ina Fried, Music Stops for Mac Windows Media Player, CNET NEWS, Jan. 12,
2006,
http://www.news.com/
Music-stops-for-Mac-Windows-Media-Player/
2100-1047_3-
6026715.html?part=rss&tag=6026715&subj=news; Kevin J. O’Brien, As EU Debated,
Microsoft Took Market
Share, INT’L HERALD TRIB., Sept. 16, 2007, http://
www.iht.com/articles/2007/09/16/news/msft17.php.
106
See Ina Fried, Music Stops for Mac Windows Media Player, CNET NEWS, Jan. 12,
2006,
http://www.news.com/
Music-stops-for-Mac-Windows-Media-Player/2100-1047_3-
6026715.html?part=rss&tag=6026715&subj=news.
107
EC Decision, supra note 52, ¶ 771.
108
EC CFI Judgment, ¶ 771
109
A server operating system is an operating system for a server, a device that
performs services for connected
personal computers as part of a client-server architecture. In contrast, a
client (or desktop) operating system
serves only a personal computer.
110
See Microsoft Corp., Windows NT and UNIX Interoperability, Oct. 1, 1997,
http://www.microsoft.com/technet/
archive/winntas/deploy/ntunxint.mspx?mfr=true.
111
See EC Decision, supra note 52, ¶¶ 176301.
112
See id. ¶¶ 236301.
113
See IDC Workload Tracker 2007 (Worldwide Server Operating System Market Shares
— Based on the IDC
Server Workload Models in 2000 and 2007).
114
See EC Decision, supra note 52, ¶¶ 78182.
115
See id.¶ 725 (”Microsoft’s research and development efforts are indeed spurred
by the innovative steps its
competitors take in the work group server operating system market. Were such
competitors to disappear, this
would diminish Microsoft’s incentives to innovate.”).
116
See Gregg Keizer, Microsoft Windows Server 2003: Experts Advise Caution,
CHANNELWEB NETWORK, Apr.
19, 2003, http://www.crn.com/
it-channel/18822436 (weighing the pros and cons of migrating to Windows
Server 2003 and noting that many companies may want to “hold tight” rather than
migrate).
117
See Steven Warren, Should You Upgrade to Windows Server 2008?, TECHREPUBLIC,
Oct. 15, 2007,
http://blogs.techrepublic.com.com/
datacenter/?p=209.
1
See Jason Brooks, A Head Full of Windows Server 2008, EWEEK, Nov. 9, 2007,
http://blogs.eweek.com/
brooks/content/windows/
a_head_full_of_windows_server_2008.html (”Microsoft’s
newly minted Windows Essential Business Server offers a very compelling answer
to the question, ‘How can a
midsize business consume all the same sorts of Microsoft core server products
that a large enterprise might
consume?’ … [A]n excellent answer to the wrong question.”).
119
See Burst.com, Inc.’s Motion for Spoliation Instruction, Witness Preclusion,
and Related Relief, In re Microsoft
Antitrust Litigation, No. JFM-02-cv-2952, MDL Docket No. 1332 (D. Md. dismissed
Mar. 11, 2005), available
at http://www.groklaw.net/pdf/
BurstSpoliation.pdf. Burst’s motion provides extensive documentation of
Microsoft’s revised “short fuse” document retention policy. For example, in a
January 2000 email to the
Windows Division, Mr. Allchin directed employees: “Do not archive your email.
Do not be foolish. 30 days.”
Id. at 13. As noted above, Microsoft settled with Burst on the courthouse steps
just before oral argument on
Burst’s spoliation motion.
120
See Interim Joint Status Report on Microsoft’s Compliance with the Final
Judgments at 6 (Oct. 17, 2003),
United States v. Microsoft, 87 F. Supp. 2d 30 (D.D.C. 2000) (No. 98-1232),
available at
http://www.usdoj.gov/atr/cases/f201300/201386.pdf.
121
See Interim Joint Status Report on Microsoft’s Compliance with the Final
Judgments at 78 (Oct. 8, 2004),
United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (No.
98-1232), available at
http://www.usdoj.gov/
atr/cases/f205700/205751.pdf. After plaintiffs, which included the United
States and
several state attorneys general, brought this complaint to Microsoft’s
attention, Microsoft responded that it was
willing to require prior notice, rather than prior consent. See id. However,
plaintiffs still believed this response
was inadequate to comply with the Final Judgment and continued to demand
modification of this requirement
until Microsoft eventually gave in, agreeing to make “additional changes”
resolving plaintiffs’ concerns. See
Interim Joint Status Report on Microsoft’s Compliance with the Final Judgments
at 6 (June 1, 2005), United
States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (No. 98-1232),
available at
http://www.usdoj.gov/atr/cases/f209300/209307.pdf.
122
See Interim Joint Status Report on Microsoft’s Compliance with the Final
Judgments at 1213, (Oct. 19, 2005),
United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (No.
98-1232). The DOJ’s October 2005
Joint Status Report noted that it was “unfortunate that the draft specification
contained the exclusivity
provision.” Id. at 13.
123
The European Commission recently fined Microsoft $1.35 billion for failure to
comply with the Commission’s
2004 antitrust ruling. See Peppi Kiviniemi, EU Fines Microsoft $1.35 bn,
LiveMint, Feb. 28, 2008,
http://www.livemint.com/
2008/02/27210155/
EU-fines-Microsoft-135-bn.html?atype=tp. A lawyer for ECIS
expressed a similar regret in regards to Microsoft’s conduct in the EC,
observing that it is “more profitable [for
Microsoft] to reap the anticompetitive benefits of non-compliance with the law
and to pay the fines than to
comply.” Id.
124
See Memorandum Opinion at 38 (Jan. 29, 2008), New York v. Microsoft Corp., 224
F. Supp. 2d 76 (D.D.C.
2002) (No. 98-1232), available at
http://www.microsoft-antitrust.gov/pdf/Jan292008MemOp.pdf (”[I]t is
abundantly clear that more than five years after the Communications Protocols
and related technical
documentation were required to be available to licensees under § III.E, the
documentation envisioned by that
Section is still not available to licensees in a complete, useable, and
certifiably accurate form.”). The district
court extended the decree “based upon the extreme and unforeseen delay in the
availability of complete,
accurate, and useable technical documentation relating to the Communications
Protocols that Microsoft is
required to make available to licensees….” Id. at 3. The district court further
noted that allowing the provisions of the Communications Protocols to expire
jeopardized the “full procompetitive impact” of the Final Judgment. Id. at 4.
125
See Stephanie Condon, Vista Marketing Draws Antitrust Complaints, CNET NEWS,
Jan. 28, 2009, at
http://news.cnet.com/
8301-13578_3-10151757-38.html; Interim Joint Status Report on Microsoft’s
Compliance
with the Final Judgments at 4 (Jan. 29, 2009), United States v. Microsoft
Corp., 87 F. Supp. 2d 30 (D.D.C.
2000) (No. 98-1232), available at
http://www.usdoj.gov/atr/cases/f241600/241677.pdf; see also Microsoft
Presentation, “Advancing the Platform,” presented at Windows Hardware and
Engineering Conference, Nov. 4-7 2008, available at
http://download.microsoft.com/
download/5/E/6/
5E66B27B-988B-4F50-AF3A-C2FF1E62180F/COR-T780_WH08.pptx (describing Project
Velocity tests).
126
See Stephanie Condon, Vista Marketing Draws Antitrust Complaints, CNET NEWS,
Jan. 28, 2009, at
http://news.cnet.com/
8301-13578_3-10151757-38.html. Microsoft denies that marketing dollars will be
tied to
the test results, but that remains an open issue as the program is undergoing
changes. See id.
127
Transcript of Status Conference at 16, Jan. 28, 2009, United States v.
Microsoft Corp., 87 F. Supp. 2d 30
(D.D.C. 2000) (No. 98-1232); see also Stephanie Condon, Vista Marketing Draws
Antitrust Complaints, CNET
NEWS, Jan. 28, 2009, at http://news.cnet.com/
8301-13578_3-10151757-38 (quoting Steven Houck).
128
See Roger Parloff, Microsoft takes on the free world, CNN MONEY, May 14, 2007,
available at
http://money.cnn.com/magazines/
fortune/fortune_archive/2007/05/28/100033867/.
129
See Marguerite Reardon, Microsoft and EMC renew their vows, CNET.COM, Feb. 4,
2009, available at
http://news.cnet.com/8301-10805_3-10156015-75.html
130
See Gavin Clarke, Royalties are the admission price, Microsoft tells freetards,
THE REGISTER, Mar. 27, 2008,
available at
http://www.theregister.co.uk/2008/03/27/microsoft_brad_smith_patents_royalties/.
131
See Parloff, Microsoft takes on the free world, supra, note 128.
132
See, e.g., Matt Asay, Microsoft continues to prey on the overly cautious with
patent deals, CNET.COM, Mar. 21,
2008, available at http://www.cnet.com/
8301-13505_1-9900817-16.html.
133
See KSR International Co., Petitioner e. Teleflex Inc. et al., (2007) US 27,
available at
http://www.supremecourtus.gov/
opinions/06pdf/04-1350.pdf and In Re Bernard L. Bilski and Rand A. Warsaw,
United States Court of Appeals for the Federal Circuit, 2007-1130 (Serial No.
08/833,892), available at
http://www.cafc.uscourts.gov/
opinions/07-1130.pdf.
134
See, e.g., KSR International Co., Petitioner e. Teleflex Inc. et al., supra,
note 133; Angiotech Pharmaceuticals
Inc. v. Conor Medsystems Inc. [2008] UKHL 49; Apotex Inc. v. Sanofi-Synthelabo
Canada Inc. [2008] SCC 61.
135
See Bruce Perens, Analyzing Microsoft’s TomTom Lawsuit, DATAMATION.COM, Mar. 1,
2009, available at
http://itmanagement.earthweb.com/osrc/
article.php/3807801/Bruce-Perens-Analyzing-Microsofts-Linux-
Lawsuit.htm and Richard Hillesley, TomTom The drums of a patent war with
Microsoft? ITPRO.COM, Mar. 5,
2009, available at http://www.itpro.co.uk/610093/
tomtom-the-drums-of-a-patent-war-with-microsoft.
136
See, e.g., Federal Patent Court declares FAT patent of Microsoft null and void,
HEISE ONLINE, Mar. 2, 2007,
available at http://www.heise.de/
english/newsticker/news/86141.
137
See Press Release, European Commission, Antitrust: Commission Confirms Sending
a Statement of Objections
to Microsoft on the Tying of Internet Explorer to Windows (Jan. 17, 2009),
available at
http://europa.eu/rapid/
pressReleasesAction.do?reference=MEMO/09/15.
138
See Press Release, European Commission, Commission Initiates Formal
Investigation Against Microsoft in
Two Cases of Suspected Abuse of Dominant Market Position (Jan. 14, 2008),
available at
http://europa.eu/rapid/
pressReleasesAction.do?reference=MEMO/08/19.
139
See Charles Forelle, Microsoft’s Office Push Scrutinized by EU, WALL ST. J.,
Feb. 8, 2008,
http://online.wsj.com/article/
SB120242867034452081.html (stating that the EC is examining whether
Microsoft’s pressure on countries to vote for the Office Open XML
standard “amounted to an undue stifling of
competition”). “In the months and weeks leading up to the vote, Microsoft
resellers and other allies joined standards bodies en masse helping swell the
Italian group, for instance, from a half-dozen members to 85.”
Id.; see also Daniel Goldberg, Microsoft Pressed Swedish Partners to Vote for
Open XML, PC WORLD, Aug.
30, 2007, http://www.pcworld.com/
article/id,136599-pg,1/article.html (noting that Microsoft offered “extra
marketing contributions” and “extra support in the form of Microsoft resources”
to persuade its Swedish
business partners to vote for the adoption of Office Open XML).
140
Press Release, Microsoft, Microsoft Makes Strategic Changes in Technology and
Business Practices to Expand
Interoperability (Feb. 21, 2008), available at
http://www.microsoft.com/presspass/
press/2008/feb08/
02-21ExpandInteroperabilityPR.mspx; Mary-Jo Foley, All About Microsoft: Reading
the Fine Print on Microsoft’s
Open-Source Promises, ZDNET, Feb. 21, 2008,
http://blogs.zdnet.com/microsoft/?p=1208.
141
See Dean Hachamovitch, Microsoft’s Interoperability Principles and IE8, IEBLOG,
Mar. 3, 2008,
http://blogs.msdn.com/ie/
archive/2008/03/03/microsoft-s-interoperability-
principles-and-ie8.aspx.
142
See, e.g., Chris Wilson, Standards and CSS in IE, IEBLOG, July 29, 2005,
http://blogs.msdn.com/ie/
archive/2005/07/29/445242.aspx; Ted Schadler, Commentary: IBM, Microsoft’s Web
Services Sing-Along, CNET NEWS, Sept. 22, 2003,
http://www.news.com/2030-1069_3-5079712.html; Nick
Wingfield, Microsoft Standards: Windows to W3C, CNET NEWS, July 1, 1997,
http://www.news.com/
Microsoft-standards-Windows-to-W3C/
2100-1023_3-201106.html.
143
Press Release, European Commission, Commission Takes Note of Microsoft’s
Announcement of
Interoperability Principles (Feb. 21, 2008), available at
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/106 (emphasis
added).
144
Press Release, European Commission, Commission Decision to Impose Penalty
Payments on Microsoft–
Frequently Asked Questions (Feb. 27, 2008), available at
http://europa.eu/rapid/
pressReleasesAction.do?reference=MEMO/08/125.
145
Microsoft Corp., Introduction to DOM Storage, Microsoft Developer Network,
http://msdn2.microsoft.com/en-
us/library/cc197062.aspx.
146
See World-Wide Web Consortium, HTML 5: A Vocabulary and Associated APIs for
HTML and XHTML
§ 4.10 (Working Draft, June 10, 2008), available at
http://www.w3.org/TR/html5/#storage.
147
Compare id. (documenting a standard set of storage related events and
synchronous operations) with Microsoft
Corp., Introduction to DOM Storage, Microsoft Developer Network,
http://msdn.microsoft.com/en-
us/library/cc197062.aspx (documenting different storage-related event names and
asynchronous operations).
148
See California Group’s Report on Remedial Effectiveness at 24 (Aug. 30, 2007),
New York v. Microsoft Corp.,
224 F. Supp. 2d 76 (D.D.C. 2002) (No. 98-1232), available at
http://www.naag.org/assets/files/pdf/antitrust.2007-08-30_Filed_CA_Group_
Effectiveness_Report.pdf; see also
Microsoft Corp., Annual Report (Form 10-K) at 67 (July 31, 2008), available at
http://idea.sec.gov/Archives/edgar/
data/789019/000119312508162768/d10k.htm. The profit margin for
Microsoft’s client segment, which includes its Windows operating system, was
77% in fiscal year 2008. See id.
at 23. The profit margin for Microsoft’s business division, which includes
Office, was 65%. See id. at 26.
149
See Operating System Market Share Survey, Net Applications, Dec. 2008,
available at
http://marketshare.hitslink.com/operating-system-market-share.aspx?qprid=8;
California Group’s Report on
Remedial Effectiveness at 10 (Aug. 30, 2007), New York v. Microsoft Corp., 224
F. Supp. 2d 76 (D.D.C. 2002)
(No. 98-1232), available at http://
www.naag.org/assets/files/pdf/antitrust.2007-08-
30_Filed_CA_Group_Effectiveness_Report.pdf.
150
See California Group’s Report on Remedial Effectiveness at 10 (Aug. 30, 2007),
New York v. Microsoft Corp.,
224 F. Supp. 2d 76 (D.D.C. 2002) (No. 98-1232), available at
http://www.naag.org/assets/files/pdf/
antitrust.2007-08-30_Filed_CA_
Group_Effectiveness_Report.pdf.
151
See id.; see also Hadley Stern, Mac Updates vs. Windows Updates, O’REILLY
NETWORK, May 20, 2004,
http://www.oreillynet.com/
mac/blog/2004/05/
mac_updates_vs_windows_updates.html (contrasting Apple’s
regular update schedule for its operating system with Microsoft’s and noting
that “Microsoft’s … approach
leaves innovation on a very slow timeframe”).
152
See Robert Vamosi, Editors’ Reviews: Windows Vista, CNET REVIEWS, Jan. 24,
2007,
http://reviews.cnet.com/windows/
windows-vista-home-premium/
4505-3672_7-32013237.html?tag=prod.2
(labeling Vista a “warmed-over Windows XP Home edition” and noting that after
five years of development
“there’s a definite ‘Is that all?’ feeling”); Ina Fried & Margaret Kane,
Microsoft Revamps Its Plans for
Longhorn, CNET NEWS, Aug. 27, 2004, http://www.news.com/
Microsoft-revamps-its-plans-for-
Longhorn/2100-1016_3-5327150.html (noting that Microsoft “has not had a full
release of its desktop operating
system since Windows XP debuted in October 2001″).
153
Top Ten Terrible Tech Products, CNET CRAVE, Nov. 20, 2007,
http://crave.cnet.co.uk/gadgets/
0,39029552,49293700-10,00.htm.
154
EC Decision, supra note 52, ¶ 463 (citing an internal Microsoft memo drafted
for Bill Gates by C++ General
Manger Aaron Contorer and dated Feb. 21, 1997).
155
See To Pay or Not to Pay: The World of Office Suites Opens Up, KNOWLEDGE@xxxx
CAREY, Arizona State
Univ. School of Business, Oct. 10, 2007,
http://knowledge.wpcarey.asu.edu/
article.cfm?articleid=1483; see also
Daniel Eran Dilger, Microsoft’s Outrageous Office Profits, ROUGHLY DRAFTED MAG,
Sept. 9, 2007,
http://www.roughlydrafted.com/2007/
09/09/microsoft%e2%80%99s-outrageous-office-profits/ (”Microsoft’s
Office suite represents the third pillar of the company’s core trio of
monopolies, next to its Windows desktop
software and its Windows Server products.”).
156
See Microsoft Office - Compare the Office 2007 Suites,
http://office.microsoft.com/en-
us/suites/FX101635841033.aspx.
157
See Kurt Cagle, Microsoft Office Open XML Fails to Win ISO Vote, O’REILLY XML
BLOG, Sept. 4, 2007,
http://www.oreillynet.com/xml/blog/2007/09/microsoft_office_open_xml_fail.html.
158
See Jefferson Graham, Google Apps Can Be a Small Firm’s Best Friend, USA TODAY,
Feb. 12, 2008,
http://www.usatoday.com/tech/products/
software/2008-02-12-google-apps_N.htm (calling Microsoft Office “a
software behemoth in Corporate America”).
159
See Microsoft Corp., Annual Report (10-K), at 26 (July 31, 2008), available at
http://idea.sec.gov/Archives/edgar/data/
789019/000119312508162768/d10k.htm; see also Daniel Eran Dilger,
Office Wars 3–How Microsoft Got Its Office Monopoly, ROUGHLY DRAFTED MAG.,
Sept. 10, 2007,
http://www.roughlydrafted.com/2007/
09/10/office-wars-3-how-microsoft-got-its-office-monopoly/
(”Microsoft’s Office monopoly gives the company more revenues and delivers
nearly as much profit as its
Windows software.”).
160
See David Kirkpatrick, Gates and Ozzie: How to Escape E-Mail Hell, FORTUNE,
June 27, 2005, 169-72,
available at http://money.cnn.com/
magazines/fortune/fortune_archive/2005/
06/27/8263426/index.htm (”Our
biggest competitor is always the status quo–people may just do things the way
they’ve been doing them and
feel, hey, that’s good enough.”).
161
See Gregg Keizer, Microsoft Office System, CNET REVIEWS, Oct. 21, 2003,
http://reviews.cnet.com/4520-
3513_7-5092597-1.html?tag=txt (explaining that Microsoft Office “isn’t a
must-have upgrade for the average
home user”); Gregg Keizer, Microsoft Office XP Suite Reviews, CNET REVIEWS,
Mar. 15, 2001,
http://reviews.cnet.com/
office-suites/microsoft-office-xp/
4505-3524_7-5152705.html?tag=prod.txt.5 (noting
that Microsoft Office XP is “not worth the cost, time, and effort for single or
home users” and offers only
“incremental improvements”); Gregg Keizer, All About Office 2000: Should You
Upgrade?, CNET REVIEWS,
Apr. 12, 1999, http://web.archive.org/
web/20001218073500/home.cnet.com/category/
topic/0,10000,0-3670-7-278204,00.html (follow the “Should You Upgrade?” link on
the right) (stating that Office 2000 is not “cost
smart” for “small businesses, work-at-homers, or those operating without the
infrastructure of an intranet”).
162
See Elinor Mills, Google Combines Word Processing, Spreadsheets, CNET NEWS,
Oct. 10, 2006,
http://www.news.com/
Google-combines-word-processing,-spreadsheets/2100-1032_3-
6124593.html?tag=nefd.top (explaining that Google Docs & Spreadsheets is a free
program that allows users to
manage and create documents on the Web and noting that Microsoft has responded
by “revamping its
business”); see also Elsa Wenzel, Microsoft Office 2007 Office Suite Reviews,
CNET REVIEWS, Jan. 29, 2007,
http://reviews.cnet.com/office-suites/microsoft-office-2007/4505-3524_7-32143052.html?tag=prod.txt.1
(”The
advent of Office 2007 comes as a growing number of competing tools are simpler,
cost less (if they aren’t free),
and handle the same core features.”).
163
See Elsa Wenzel, Microsoft Office 2007 Office Suite Reviews, CNET REVIEWS, Jan.
29, 2007,
http://reviews.cnet.com/office-suites/
microsoft-office-2007/4505-3524_7-32143052.html?tag=prod.txt.1 (noting
that the average user rating for Microsoft Office 2007 was “mediocre”). With
Office 2007, Microsoft switched
from its proprietary binary file format for electronic documents to XML file
format. Id. (”The new era of
Office affects even those who don’t upgrade, and a conversion tool is needed to
let older Office versions open
Office 2007’s default, Open XML files.”). For developers who had spent years
reverse engineering the
proprietary binary file format in order to allow some level of interoperability
with non-Microsoft systems, the
switch to XML caused new incompatibility problems with these non-Microsoft
users. See Ephraim Schwartz,
ODF vs. OpenXML, INFOWORLD, May 15, 2007,
http://weblog.infoworld.com/realitycheck/
archives/2007/05/odf_vs_openxml.html.
164
See Browser Market Share for YTD 2009, Net Applications,
http://marketshare.hitslink.com/browser-market-
share.aspx?qprid=0 (showing Microsoft Internet Explorer market share at almost
70%); California Group’s
Report on Remedial Effectiveness at 3 (Aug. 30, 2007), New York v. Microsoft
Corp., 224 F. Supp. 2d 76
(D.D.C. 2002) (No. 98-1232), available at http://www.naag.org/
assets/files/pdf/antitrust.2007-08-
30_Filed_CA_Group_Effectiveness_Report.pdf (noting shares above 85% through
2006). It is worth noting
that what little ground Internet Explorer has recently lost to its rival
browsers is not due to any success on the
part of the consent decree that ended the United States’ antitrust suit against
Microsoft. As the California
Group (the Plaintiff States of California, Connecticut, Iowa, Kansas,
Minnesota, and Massachusetts and the
District of Columbia) emphasized, even counsel for the United States was not
willing to attribute any reduction
in Microsoft’s web browser market share to the Final Judgment. See id. at 9
(quoting counsel for the United
States as saying, “It’s hard to know what [that reduction is] attributable to,
and I wouldn’t want to credit the
final judgment.”).
165
See Brian Wilson, Browser History Timeline: Overview,
http://www.blooberry.com/indexdot/history/
browsers2.htm.
166
See id.; Rex Baldazo, Review: Microsoft Internet Explorer 6.0, CNET REVIEWS,
Mar. 31 2003,
http://reviews.cnet.com/software/microsoft-internet-explorer-6/4505-3513_7-20832430.html?tag=prod.txt.2;
Jim Rapoza, IE 5.0’s Best Surprise Is No Surprise, EWEEK, Mar. 29, 1999,
http://web.archive.org/web/20010209175240/
zdnet.com/products/stories/reviews/0,4161,2227704,00.html.
(stating that as an upgrade, IE 5.0 is “bloated” and “doesn’t radically change
the product”).
167
Charles H. Ferguson, What’s Next for Google, TECH. REV., Jan. 2005,
http://www.technologyreview.com/Infotech/14065/ (pointing out that only
recently has Microsoft again begun
innovation in the browser market once it “realized that Firefox was starting to
gain share”). Around the same
time, Microsoft also ended development of Internet Explorer for Mac users,
redeploying the entire team to work
on an unrelated project. See Jorg Brown, I was on the MacIE 6 Team When It Got
Canned, SLASHDOT, Dec. 18,
2005, http://apple.slashdot.org/
comments.pl?sid=171546&cid=14288661 (”[A]lmost immediately after 5.0 was
released, the MacIE team was redeployed to work on a set-top DVR box.”); see
also Colin Baker, Microsoft
Drops Mac IE, CNET NEWS, Dec. 19, 2005, http://www.news.com/
Microsoft-drops-Mac-IE/2100-1016_3-
6000919.html (stating that Microsoft officially ended support for the Mac IE in
2003 and that it had not updated
the software in over three years, meaning that Mac users only had access to IE
5 while Windows users had IE
6).
168
See Robert Vamosi, Internet Explorer 7 Browser Review, CNET REVIEWS, Oct. 18,
2006,
http://reviews.cnet.com/browsers/internet-explorer-7/4505-3514_7-32111537.html
(”IE 7 was Microsoft’s one
chance to leapfrog ahead of the competition, but the company has only barely
caught sight of the current front-
runners. For more features and greater security, switch to Mozilla Firefox.”).
Some changes within IE7 are
“merely cosmetic” and the browser is missing the “innovative, cutting-edge
features” found on Firefox2. Id.;
see also Fred Vogelstein, Search and Destroy, FORTUNE, May 2, 2005, at 75,
available at
http://money.cnn.com/magazines/fortune/
fortune_archive/2005/05/02/8258478/index.htm (”[T]he recently
released Firefox browser, which can be downloaded free, has forced Gates to
reconstitute an Internet Explorer
development team.”).
169
Dare Obasanjo, Mac IE’s Death: A Case for Microsoft Disbanding or Transferring
the Windows IE Team, Dare
Obasanjo aka Carnage4Life, Dec. 19, 2005,
http://www.25hoursaday.com/weblog/
PermaLink.aspx?guid=ba90f4aa-4a07-4f3e-a318-bc1095c61980.
170
Walter S. Mossberg, For Tabbed Browsing and Other New Tricks, Try Explorer’s
Rivals, WALL ST. J., Jan. 8,
2004, available at http://web.archive.org/
web/20070214035829/http://ptech.wsj.com/archive/ptech-
20040108.html.
171
See California Group’s Report on Remedial Effectiveness at 3 (Aug. 30, 2007),
New York v. Microsoft Corp.,
224 F. Supp. 2d 76 (D.D.C. 2002) (No. 98-1232), available at
http://www.naag.org/assets/files/pdf/antitrust.2007-08-30_Filed_CA_Group_Effectiveness_Report.pdf
(reporting an 85% market share for Internet Explorer in 2006).
172
See Robert Vamosi, Internet Explorer vs. Firefox 2, CNET REVIEWS, Oct. 30,
2006,
http://reviews.cnet.com/
4520-10442_7-6656808-7.html?tag=btn (stating that “Firefox 2 still rules the
browser
roost for now, despite a much improved version of Internet Explorer” and noting
that Firefox has “earned its
spot at the top of the browsers”) (link is to inner page of review); Erik
Larkin, Radically New IE 7 or Updated
Mozilla Firefox 2–Which Browser is Better?, PC WORLD, Oct. 24, 2006,
http://www.pcworld.com/article/
id,127309-page,6-c,browsers/article.html (”Of the two rivals, Firefox remains
the better application.”).
173
See California Group’s Report on Remedial Effectiveness at 12 (Aug. 30, 2007),
New York v. Microsoft Corp.,
224 F. Supp. 2d 76 (D.D.C. 2002) (No. 98-1232), available at
http://www.naag.org/assets/files/pdf/
antitrust.2007-08-30_Filed_CA_Group_Effectiveness_Report.pdf (”The
OEM flexibility provisions of the Final Judgment have not produced
competitively significant results because
they do not adequately address the persistent disincentives (including
Microsoft’s advantage of free universal
distribution, additional support costs, potential consumer confusion and PC
resource constraints) that discourage
OEMs from preloading rival middleware products on a Windows PC….”); see also
Edward F. Moltzen, Firefox
Gets No Respect from PC Makers, Despite Popularity, CHANNELWEB NETWORK, Oct.
15, 2007,
http://www.crn.com/software/202402974.
174
See Net Applications, Browser Market Share,
http://marketshare.hitslink.com/report.aspx?qprid=0. As the
Chairperson of the Mozilla Foundation put it: “Equally important, the success
of Mozilla and Firefox does not
indicate a healthy marketplace for competitive products. Mozilla is a
non-profit organization; a worldwide
movement of people who strive to build the Internet we want to live in. … I
certainly hope that neither the EU
nor any other government expects to maintain a healthy Internet ecosystem based
on non-profits stepping in to
correct market deficiencies.” Mitchell Baker, Chairperson, Mozilla Foundation,
The European Commission and
Microsoft, Mitchell’s Blog, Feb. 6, 2009, http://blog.lizardwrangler.com/
2009/02/06/the-european-commission-
and-microsoft/.
175
Paul Festa, Microsoft Offers Tabbed Browsing–In IE 6, CNET NEWS, June 8, 2005,
available at
http://news.cnet.com/
Microsoft-offers-tabbed-browsing–in-IE-6/
2100-1032_3-5738037.html (explaining that
tabbed browsing is a feature, “long offered by IE competitors like Opera,
Safari and Firefox,” that enables users
to open several web pages in a single window and select among them by clicking
on a tab at the top of the page,
and noting that tabbed browsing would not be standard on Internet Explorer
until Version 7).
176
See Sara Grant, Lessons from the Browser Wars: Q&A with Pai-Ling Yin, HARV.
BUS. SCHOOL WORKING
KNOWLEDGE, Apr. 10, 2006, http://hbswk.hbs.edu/item/5288.html (detailing
corporate managers’ unwillingness
to switch their companies to Firefox).
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