Certainly true. But I think the facts show that their actions were both illegal and “bad.”
OK, I’ll take a shot at this. In large part Microsoft’s actions have been harmful to consumers in that they artificially limited consumer choice and product innovation in a significant number of areas by using their monopoly status. Some examples from the trial:
[ul]
[li]Intel Native Signal Processing software: In 1995, Intel was developing software that would allow the owners of Intel processors to get the maximum multimedia performance out of their processors. Microsoft didn’t like this software because it exposed application programming interfaces (APIs) that could be used to write software that would run on operating systems other than Windows just as easily as on Windows. As a result Microsoft pressured Intel into abandoning the software, with the promise that it would integrate the features into the Windows API. As of the end of 1998, though, Microsoft still hadn’t implemented key capabilities of Intel’s software.[/li]
Not only did Microsoft quash the NSP software, but it wanted to make sure that Intel wouldn’t develop software with operating system-independent APIs in the future. It did this by threatening to remove support for Intel processors in upcoming versions of Windows. Due to Microsoft’s monopoly in operating systems run on Intel chips, this lack of support would have had a devastating impact on Intel’s sales, so Intel backed down.
Harm to consumers: Intel processor users were (and may still be) unable to take full advantage of the multimedia performance of their CPUs.
[li]IBM PC Company: When IBM acquired Lotus in 1995 and decided to offer Lotus’ SmartSuite (an Office competitor, and a platform that offered operating system-independent APIs) with the operating systems it sold, Microsoft retaliated. It first dragged its feet on licensing negotiations for Windows 95, then finally terminated them. Microsoft tried to get IBM to renounce its decision to offer SmartSuite, but IBM refused, and as a result, Microsoft refused to license Windows 95 to IBM for over a month after it had licensed it to its competitors. As a result, IBM missed out on the pent up demand for new computers with Windows 95, as well as the back-to-school market for that fall.[/li]
Harm to consumers: users did not have the option to use SmartSuite on Windows 95 when it was released.
Harm to industry: IBM lost significant revenue by not being able to sell Windows 95 on its systems until well after its competitors.
[li]Netscape Navigator: Since Navigator also exposed operating system-independent APIs, Microsoft was intent on stemming its use and increasing the use of Internet Explorer. It did this by distributing Internet Explorer for free and tying it to Windows through both contractual and technological means. Using its monopoly power, it required OEMs (Original Equipment Manufacturers; companies like Gateway, Dell, Compaq, etc.) to include Internet Explorer with Windows. Since OEMs handle end user support, they were relucant to include both browsers because this would increase support issues and drive down profit margins. As a result, they generally only included Explorer. Microsoft also effectively cut off most of the other efficient ways for Netscape’s distribution of its browser. (Note that this is just a small sampling of the issues related to Netscape Navigator.)[/li]
Harm to consumers: in the short term, users have an artifically restricted choice in web browers. Also, users who have no need for a web browser are forced have one anyway, and to deal with the resulting increased disk usage, number of bugs, and risk of incompatibilities. In the long term, Microsoft gains a lever with which to attempt to monopolize that basic protocols of the Internet.
Harm to the industry: hurt Netscape’s business to the point where it had to sell itself to AOL to survive.
[li]Windows Boot Sequence: Microsoft was afraid that OEMs would hide Internet Explorer and promote Netscape Navigator through the use of programs run at the initial bootup (this would not uninstall Internet Explorer, so would not violate the requirement from the previous bullet). As a result, Microsoft also required that OEMs not change the initial bootup screen or icons present on the desktop. This had the additional effect of preventing OEMs from including programs run at bootup to would help novices set up and use their computer, or from including other programs that would differentiate their brand from others.[/li]
Harm to consumers: it was more difficult than necessary to set up and learn to use their computer.
Harm to industry: OEMs costs increased due to increased numbers of support calls, increased number of computers returned to stores, and decreased product registrations.
In a letter to Microsoft on this topic, Hewlett Packard stated “From the consumer perspective, we are hurting our industry and our customers.”
[li]Java: Microsoft was threatened by the operating system-independent nature of Java, and attempted to subvert it by adding proprietary extensions and failing to support parts of it, contrary to its license agreement with Sun.[/li]
Harm to industry: it was more difficult and expensive for programmers to write Java applications that ran across different platforms.
Harm to consumers: as a result, there was less choice in Java applications.
[/ul]
And I’ll also include a couple examples off the top of my head that weren’t mentioned in the trial:
[ul]
[li]DR DOS: Around the time of the beta releases of Microsoft Windows 3.1 there was a competitor to MS DOS called DR DOS. DR DOS was successful and generally considered to be superior to MS DOS by several trade magazines. With the beta releases of Windows 3.1 however, Microsoft included code that gave spurious error messages and terminated the program when it was run on top of DR DOS instead of MS DOS. It was quite clear that this was intentional as the code in question was highly obfuscated. See this link for all the gory details. With this dirty trick, Microsoft was able to sow uncertainty about DR DOS’s compatibility with Windows, which basically killed the product and protected Microsoft’s operating system monopoly.[/li]
Harm to consumers: lack of apparent choice in DOS-compatible operating systems.
Harm to industry: substantially decreased sales for Novell, the owner of DR DOS. Note that Caldera, the current owner of DR DOS, recouped some of this cost in a recent out of court settlement for an estimated $150-$400 million.
[li]Hidden APIs: Microsoft routinely incorporates APIs in their operating system products that are hidden from third party developers. These APIs often provide functionality or efficiency that does not exist in the exposed APIs. As a result, Microsoft can use their operating system monopoly to unfairly make their applications run faster or do things non-Microsoft applications cannot do.[/li]
Harm to industry: some non-Microsoft applications are unable to properly compete on the merits against Microsoft applications because they don’t have access to these APIs.
Harm to consumers: eventually, Microsoft dominates these applications, leaving consumers with fewer choices.
[/ul]
I don’t know, but this is irrelevant to the trial. At issue is whether Microsoft used anticompetitive practices to maintain its existing monopoly position in operating systems and acquire monopolies in other areas.
In some markets, yes. But again, this is irrelevant to the trial. The relevant market for the trial is operating systems for x86 (i.e. Intel) compatible personal computers. I think this is a rational definition of the market, since the products in the other areas are not substitutable for the products in this market.
Mr. Feely