Federal District Court
Tuesday, February 22, 2000
The States today are urging the Court to conclude that Microsoft has violated fundamental Federal and State antitrust laws -- laws that must apply to Microsoft and the software industry if competition, consumers and innovation are to be protected.
We argue for the premise that no industry, no firm, and no individual is above the law. And we argue from the facts already found by the Court that Microsoft has attempted collusion and used exclusionary contracts, tying and predation in a coordinated, illegal scheme to eliminate threats to its monopoly.
Microsoft's behavior has caused enormous injury to consumers, especially in terms of lost consumer choice, as the Court already has found. A finding of Microsoft liability will send an unmistakable message that no firm will be permitted to exploit monopoly power to impose its own dictates upon this industry at the expense of consumers, innovation and competition.
Structure of the States' and U.S. Argument
We argue that the Court's Findings of Fact establish that Microsoft violated the Sherman Act and comparable State laws in at least four ways:
First, and most comprehensively, we urge the Court to conclude that Microsoft undertook a host of actions that illegally maintained its monopoly in the market for personal computers. That is a violation of Section 2 of the Sherman Act, which prohibits a firm with monopoly power from maintaining that monopoly power through means that go beyond competition on the merits. We have alleged - and we urge the Court to conclude - that Microsoft has violated the law by engaging in a series of anti-competitive, exclusionary, and predatory acts to maintain its monopoly. As the Court's Findings of Fact stated, these actions harmed consumers directly and indirectly, injured competition, hobbled innovation, harmed many other businesses in the industry, and lacked pro-competitive justification.
Second, we urge the Court to conclude that Microsoft illegally tied its web browser to its operating system, in violation of Section 1 of the Sherman Act and State laws. The law prohibits tying arrangements in which agreements between a defendant and its customers require the customers as a condition of obtaining one product (the tying product, Microsoft's operating system) also to take a second product (the tied product, Microsoft's Internet Explorer browser.). The vice was not that Microsoft offered computer manufacturers and users a bundled version of Windows and Internet Explorer; the vice was that Microsoft did not give them the CHOICE of taking Windows without the browser. Microsoft thus compelled those that wished otherwise to take Internet Explorer to obtain Windows. We urge the Court to conclude those facts constitute an antitrust violation of the Sherman Act.
Third, we ask the Court to conclude that Microsoft also violated Section 1 of the Sherman Act when it entered into a variety of illegally exclusionary agreements with personal computer manufacturers, with Internet access and on-line service providers, and with Internet content providers. The law prohibits any agreement that constitutes an "unreasonable restraint on competition." Consistent with the Court's Findings of Fact, we urge the Court to conclude that the restrictive effect of numerous Microsoft agreements was not reasonably necessary to achieve legitimate pro-competitive objectives such as serving consumers though lower costs and improving products.
Fourth, we ask the Court to conclude that Microsoft violated Section 2 of the Sherman Act by its unlawful attempt to monopolize the browser market. The Act prohibits attempts to monopolize. The Supreme Court has determined that a defendant violates the prohibition if "the defendant has engaged in predatory or anti-competitive conduct, with a specific intent to monopolize, and a dangerous probability of achieving monopoly power." The Court's Findings of Fact establish each element of this offense of attempted monopolization of the browser market.
In sum, today we ask the Court to apply its Findings of Fact and conclude as a matter of law that Microsoft has violated both Section 2 and Section 1 of the Sherman Act.
And, finally, we urge the Court to proceed to consideration of appropriate remedies. The Court's Findings of Fact powerfully enumerate the consequences of Microsoft's illegal actions - direct and indirect harm to consumers, distortion of competition, hobbled and stifled innovation, reduced consumer choice, harm to competing firms, deterred investment in promising new technology. We are coming closer to addressing those consequences and determining violations.
Today marks another milestone as we move one big step closer to resolution of this landmark case. Given the enormity of the issues and the typical time consumed by most complex antitrust cases, this case has moved forward with remarkable speed and progress. We look forward to the Judge's Conclusions of Law.
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