Have the actions of Microsoft harmed the consumer?
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Have the actions of Microsoft harmed the consumer? The case at a glance. By: Min Lin Nicole Ritter Gerald DesRoches Terry Schmidt Federal Trade Commission Investigation June 1990

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Presentation Transcript
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Have the actions of Microsoft harmed the consumer?

The case at a glance.

By: Min Lin

Nicole Ritter

Gerald DesRoches

Terry Schmidt


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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.


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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.


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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%


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Consent Decree

1995

  • February 14 - U.S. District Judge Stanley Sporkin throws out consent decree

  • June 16 - Appellate court overturns ruling


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Infamous Meeting

June 1995

  • infamous meeting between Microsoft and Netscape


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Windows 95 and Internet Explorer

July 1995

  • Microsoft releases Windows 95 and “integrated” Internet Explorer


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Consent Decree

1995

  • August 21 - U.S. District Judge Thomas Penfield Jackson approves consent decree


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Department of Justice Investigation

September 1996

  • DOJ investigates possible violation of consent decree by Microsoft


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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


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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


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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


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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


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October 19, 1998

  • trial begins in Washington D.C.

  • Judge Jackson presiding


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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


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Sherman Act

Section 1

  • prohibits “tying” arrangements or “exclusionary” contracts

    Section 2

  • prohibits a firm from maintaining monopoly through anti-competitive acts


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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


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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


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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


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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


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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


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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


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