Microsoft trial

In June 2004, the six-year long antitrust case against Microsoft was settled in the U.S. when an appeals court upheld the November 2002 decision of the court. Also in the summer of 2004, Microsoft settled numerous class-action suits filed separately by Vermont, Minnesota, California and several other states by making various types of cash payments and offering vouchers to retail customers. Although Microsoft is still appealing the $613 million fine from the European Union, it appears that 2004 is the year the company worked hard at putting an end to its many legal battles and move forward with a clean slate.

Trial History
In May 1998, Microsoft was sued by the U.S. government and 19 states for antitrust violations (in mid 2001, New Mexico settled independently with the company). The trial started in October 1998 and dealt with exclusionary tactics that caused Microsoft products to be used in place of others. It especially focused on Microsoft's intentions to make its Web browser the standard.

In November 2001, a settlement was made by Microsoft, the U.S. government and nine of the states, but was rejected by the other states. One year later, the settlement was approved. Industry veterans have been very opinionated, which is only natural considering the power and influence that Microsoft wields. Details follow.

General opinions against...
Since Microsoft's marketing can crush its competition, it has become the "evil empire" in the minds of many. Critics claim its operating systems have been full of bugs, its applications are overbloated and the combination of mediocre software and strong-arm tactics are shameful, considering it is the most influential software company in the industry. Its adversaries contend that if Microsoft is not restrained, it will continue to exert excessive force to get its way.

General opinions for...
Pro-Microsoft people say that given the market-driven world we live in where the end game is to win at all cost, no company could have produced software with fewer bugs and done a better job. Supporters say that the world craves a single standard and that DOS and Windows paved the way for enormous prosperity for the entire PC industry, not just Microsoft shareholders.

They also say Microsoft has done an outstanding job of keeping it together. Managing thousands of intelligent software engineers who all want to do things their own way is a feat of major proportions. Proponents point out that leading companies in every industry are always extremely aggressive in order to keep up the momentum, and the last thing we need is the government dictating how companies should do business in this field.

Nevertheless...
Regardless of opinion, the crux of an antitrust trial is whether, as a monopoly, a company has used methods that have eliminated consumer choice.

The results...
In November 1999, federal District Judge Thomas Penfield Jackson ruled that Microsoft was a monopoly that used its power to punish its competitors and keep innovative products from reaching the market. In June 2000, the judge ordered the company be broken up into two: one for operating systems and another for everything else. The decision was immediately appealed. In June 2001, a federal appeals court threw out the lower court's order to break up the company and sent the case back to the lower court for further review by a new judge. The Findings of Fact and Conclusions of Law from Judge Jackson which stated that Microsoft repeatedly abused its monopoly power were left standing.

In November 2001, a proposed settlement was made by the U.S. government and nine of the 18 states. Microsoft agreed to allow competitive products on machines with Windows and to open up source code to programming interfaces that would ensure third-party programs would run as efficiently under Windows as Microsoft applications. A three-person technical committee was assigned to monitor compliance for five years.

The remaining states proposed a stricter settlement that required Microsoft to disclose more technical information and make systems configuration more flexible for PC vendors. They wanted to make sure that the company will not retaliate against PC vendors and participants in the litigation, and they wanted Microsoft to ship a version of Java with Windows for the next 10 years. They also wanted more adherence to open standards, and they wanted Microsoft to port its Office products to Linux. The states argued that a version of Windows should be made available without the applications installed, not just concealed.

In November 2002, most of the original settlement was upheld by Judge Colleen Kollar-Kotelly. Viewed as a win for Microsoft, the technical committee was replaced with a committee of Microsoft's own board members. Microsoft agreed to provide uniform contract terms for all customers and release programming interfaces (APIs) that allow third-party applications to run as efficiently under Windows as Microsoft applications. It also agreed to allow vendors to remove various icons from Windows.

That was not the end, however. Ever since the 1999 ruling that declared the company a monopoly, numerous organizations filed suits against Microsoft, and several states did not agree to the 2001 or 2002 rulings. Although many of these suits have been either settled or dismissed, the European Union pursued its own antitrust suit that wound up with a $664 million fine against the company in March 2004. It also demanded that Microsoft unbundle its media player from Windows, and Microsoft subsequently agreed to offer a Windows XP "N" version ("N" means "No media player").

Microsoft paid the EU fine in full in July of 2004, but the money was put into an escrow account pending the outcome of the company's appeal. In September 2007, the appeal was rejected.

In June 2004, the U.S. appeals court rejected arguments by Massachusetts and competitors, which effectively upheld the November 2002 decision and ended the six-year long case in the U.S. See Microsoft and IBM.