Microsoft Agrees to End Anticompetitive Practices, Spurs Competition and Innovation in Software Industry

The US Justice Department announced yesterday that Microsoft Corp has agreed to end marketing practices that "choked off competition and preserved its monopoly position." This settlement marks the end of the most significant antitrust investigation of the past decade and is expected to increase competition and spur innovation in software, while lowering prices for consumers. Industry experts and government lawyers predict that the settlement will benefit other makers of software, such as IBM and Novell, by providing them with new opportunities to sell their products to computer manufacturers.

Key Takeaways:

• Microsoft has agreed to end marketing practices that stifled competition and preserved its monopoly position, marking the end of a decade-long antitrust investigation.
• The settlement is expected to increase competition and innovation in software, while lowering prices for consumers.
• The agreement bars Microsoft from enforcing licensing agreements that use volume pricing to block out competitors, giving IBM, Compaq, and Dell new opportunities to sell their software products.
• Microsoft's settlement also marks the first time US officials have coordinated an antitrust accord with the European Union, requiring Microsoft to abide by the restrictions on both sides of the Atlantic.
• Since 1990, federal antitrust lawyers have been investigating complaints that Microsoft has used its near-monopoly power in the software industry to force its products on computer manufacturers.
• Microsoft's programs run on 80% of the world's 150 million computers, giving it a near-monopoly on the operating software that controls the basic functions of a personal computer.
• The settlement prevents Microsoft from using volume pricing of its MS-DOS and Windows operating system software to block out competitors.
• Without admitting wrongdoing, Microsoft officials agreed to the settlement to head off a threatened antitrust lawsuit that could have kept the company in court for years.

Statistics:

• 80% of the world's 150 million computers run on Microsoft's operating software (Source: Last year's estimate)
• 1990 was the year federal antitrust lawyers began investigating complaints that Microsoft has used its near-monopoly power in the software industry (Source: Original text)
• Microsoft's programs run on the majority of the world's personal computers, giving it a near-monopoly position in the software industry (Source: Original text)

Sources:

• Los Angeles Times
• US Justice Department press release (exact date not mentioned in the original text)