Every contract, combination in the form of trust or otherwise, or
conspiracy, unrestrained trade or commerce among the several states, or with foreign
nations, is declared to be illegal.
Every person who shall monopolize or attempt to monopolize or combine or conspire
with any other person or persons, to monopolize any part of trade or commerce among
the several states or with foreign nations shall be deemed guilty of a felony.
CLAYTON ANTITRUST ACT
It shall be unlawful to discriminate in price between different purchasers of
It shall be unlawful for any person to lease or make a sale or contract on the
condition, agreement, or understanding.
No Corporation shall acquire the whole or any part of other corporation.
FEDERAL TRADE COMMISSION ACT
Unfair methods of competition and unfair or deceptive acts or practices are declared
Microsoft a monopoly?
In late 1990, Microsoft’s MS Office applications had 90% of
Market share in Internet browser market of 44%, server
operating system 36%
Microsoft adopted pricing policy that prevents entry of new
players and bundle policy
Distributing Internet browser software, IE, free of cost along
with its windows operating system
“The government viewed microsoft as a paranoid
monopolist,someone who gets up in middle of the night and
shoots at amy moment. ”-chief judge,US District Court.
During 1991-1994 investigations by the Federal Trade Commission (“FTC”) ended with no
In 1994, Microsoft had signed a decree not to bundle its software with its OS unless it was
In 1997, it was compelling the PC makers to ship its internet browser free with windows 95.
Sun Microsystems, Oracle, IBM, Netscape, and Novell formed a loose coalition lobbying intensely
for antitrust action against Microsoft.
On October 20, 1997, DOJ alleged that Microsoft violated the 1995 consent decree.
On December 11, 1997, Judge Thomas Penfield Jackson issued a preliminary injunction barring
the bundling of IE with On May 12, 1998, the Court of Appeals (DC Circuit) ruled that the 1995
consent decree did not apply to Windows 98.
On June 23, 1998, the Court of Appeals voided the 1997 preliminary injunction, arguing that
“courts are ill equipped to evaluate the benefits of high-tech product design.”
DOJ filed a major antitrust suit against Microsoft. In this action (DOJ Complaint 98-12320), filed
on May 18, 1998, DOJ was joined by the Attorneys General of 20 States and the District of
Columbia. 24 witnesses testified over a period of 62 days.
1999, Judge Jackson finds that Microsoft holds monopoly power with its
Windows Operating System and issues his final ruling ordering that
Microsoft be split into two companies, one for the operating system and one
In 2000, June 28 – Court of Appeals issues its ruling
reversing Judge Jackson’s order to break up Microsoft, but finding merit in
allegations that Microsoft violated Sec. 2 of the Sherman Act. Court
remanded the case back to a different district court judge for further
November 2 – Microsoft and U.S. Justice Department announce they have
arrived at a settlement agreement requiring Microsoft to make portions of
Windows software code available to competitors so they can ensure that
their products work with the operating system, and allowing computer
manufacturers to pick and choose which of its products to load onto their
machines without fear of retribution from Microsoft.
In June 2008, the US District court gave its ruling that Microsoft has
violated the antitrust laws by abusing its power in operating system.
Jackson ruled that Microsoft was a monopoly; basing on 3 factors
Microsoft’s share of the market for operating system was extremely
large & stable
A high entry barrier protected Microsoft’s dominant market share
High entry barrier
Verdict Company should split into 2 smaller companies
Windows operating system
Internet & other Business
Options Before DOJ
DOJ stated that it would ask for restrictions on Microsoft's
business tactics. The DOJ had two options:-
Force Microsoft to open its source code for the windows
operating system – to competitors
Allow PC original equipment manufacturers (OEMs) to
configure Windows any way they liked, removing Microsoft
programs, adding rival programs, and even changing the
entire appearance of Windows.
September 2000, Supreme court declined
Break up Microsoft not remedy: Supreme court
Court upheld conclusion of Microsoft having
monopoly & violated US antitrust laws
In 2001, court ordered Microsoft and US
government resolve remaining issues,after the
court reversed the appeal.
• In 2001, Microsoft appealed to the supreme
court to overcome the the case the it had illegal
monopoly, hared customers and stifled
• In 2001, judge said to Microsoft and the US
Government to resolve the case with additional
evidence to be presented.
• DOJ urged the supreme court to reject Microsoft
plea as the company had violated antirust laws.
Have potential to attract
Should establish a clean
Threat from competitors
companies like from Linux
May face strong illegal
Huge Brand name and
reputation in the market
Have a monopoly in the
Customers lacked a
commercially viable alternative
Contradiction among own
Microsoft dominance because of Antitrust
case, affected only for short run
Microsoft’s OS monopoly continues today
Microsoft has so many actions against it, can
only cover the most important
Law should not eradicate competition rather it
should ensure proper competition