Have the actions of Microsoft harmed the consumer? The case at a glance. By: Min Lin Nicole Ritter

1. Have the actions of Microsoft harmed the consumer? The case at a glance. By: Min Lin Nicole Ritter Gerald DesRoches Terry Schmidt

2. Federal Trade Commission Investigation June 1990 • Federal Trade Commission secretly investigates possible collusion between Microsoft and IBM. February 5, 1993 • FTC takes no action against Microsoft after 2-2 vote of its commissioners.

3. U.S. Department of Justice Investigation August 21, 1993 • U.S. Justice Department takes over Microsoft investigation. July 15, 1994 • Microsoft and U.S. DOJ sign consent decree.

4. Netscape Communications Corp. December 1994 • Netscape Communications Corp. introduces Navigator Internet Browser • shortly after introduction have 80% of Internet browser market; Microsoft less than 5% • three years later, Netscape slips to 50% and Microsoft up to 40%

5. Consent Decree 1995 • February 14 - U.S. District Judge Stanley Sporkin throws out consent decree • June 16 - Appellate court overturns ruling

6. Infamous Meeting June 1995 • infamous meeting between Microsoft and Netscape

7. Windows 95 and Internet Explorer July 1995 • Microsoft releases Windows 95 and “integrated” Internet Explorer

8. Consent Decree 1995 • August 21 - U.S. District Judge Thomas Penfield Jackson approves consent decree

9. Department of Justice Investigation September 1996 • DOJ investigates possible violation of consent decree by Microsoft

10. Violation of Consent Decree October 20, 1997 • DOJ asks Judge Jackson to fine Microsoft $1 million/day for violating consent decree and bundling Windows 95 and Internet Explorer • Microsoft claims the browser is an integrated part of the operating system

11. Microsoft Guilty December 11, 1997 • Judge Jackson issues preliminary injunction against Microsoft • requires unbundling of Web browser from Windows 95 operating system • appoints “special master” to advise him

12. Microsoft Appeals and Appeals and Appeals and . . . December 1997 to May 1998 • Microsoft appeals decision • offers computer makers a version of Windows 95 that does not work • DOJ asks Microsoft to be held in contempt for not complying to order • Microsoft appeals appointment of special master • Microsoft allows computer makers to install Windows 95 without Internet Explorer icon • Court of Appeals halts special master investigation • Court of Appeals rules that injunction against Microsoft does not apply to Windows 98

13. Anti-trust Violation May 18, 1998 • DOJ and 20 states file major anti-trust cases alleging Microsoft abused its monopoly power to stifle competition June 1998 • Windows 98

14. October 19, 1998 • trial begins in Washington D.C. • Judge Jackson presiding

15. Sherman Act • Came into force in 1890 • stop corporate giants from forming “trusts” to buy competitors, force others out of business and raise prices. • IBM - 1969 to 1982 • AT&T - 1974 to 1982 • Standard Oil - 1911 • Aluminum Co. of America - 1945 • American Tobacco - 1946

16. Sherman Act Section 1 • prohibits “tying” arrangements or “exclusionary” contracts Section 2 • prohibits a firm from maintaining monopoly through anti-competitive acts

17. Courtroom Showdown What must government prove? • proof of monopoly • 80% of computers worldwide use Microsoft operating systems • abusing monopoly power • predatory pricing • exclusionary contracts • market division • hurting consumers

18. Courtroom Showdown • trial begins October 19, 1998 • government’s key witnesses include deposition videotape of Bill Gates, senior executives from IBM, Apple, Sun, Intel, AOL, Intuit, Netscape, economist from MIT, software experts and admittance of thousands of e-mail “snippets” • Microsoft’s key witnesses are senior Microsoft executives, economist from MIT

19. AOL and Netscape Merger November 24, 1998 • AOL and Netscape complete $4 billion merger • alliance with Sun Microsystem • Microsoft claims evidence that competition is alive and well and their dominant market position could be overthrown in the blink of an eye • South Carolina drops out of lawsuit

20. The Verdict June 24, 1999 • trial testimony ends September 21, 1999 • closing arguments November 5, 1999 • Jackson in preliminary findings, declares Microsoft a monopoly November 9, 1999 to April 1, 2000 • Microsoft and government in mediation talks - fail

21. The Verdict April 3, 2000 • Judge Jackson rules • Microsoft guilty of violating Section 1 and 2 of Sherman Act • invites coalition of states and DOJ to propose remedies June 9, 2000 • Judge Jackson files final decision • actions harmed consumers • orders company split in two

22. Aftermath June 10, 2000 to present • Microsoft appeals to Court of Appeals • government wants appeal expedited to Supreme Court • Supreme Court assigns appeal to Court of Appeals • decision expected by spring of 2001 • expected to be appealed to Supreme Court - could take another year