Microsoft Under Fire: Government Sues Over Antitrust Practices

Strategic Insights -

The federal government and 20 state attorneys general have launched a broad antitrust suit against Microsoft, accusing the software giant of using its monopoly in personal computer operating systems to control the Internet and software products. The suit alleges that Microsoft uses its dominance to restrict consumer choice, engage in predatory pricing, and limit competition. The government is seeking to force Microsoft to sell a version of its Windows 98 operating system that does not include Internet Explorer, or to package Netscape's Navigator browser with Windows 98.

Key Takeaways:

  • The federal government and 20 state attorneys general have filed two antitrust suits against Microsoft, accusing the company of using its monopoly to restrict consumer choice and limit competition.
  • The suits allege that Microsoft uses predatory pricing to gain control of the software market, and that the company has engaged in exclusionary contracts with Internet service providers to favor its own products and services.
  • Microsoft is also accused of trying to take control of the E-mail software market by bundling its Outlook Express program with Windows 98.
  • The suits seek to force Microsoft to sell a version of Windows 98 that does not include Internet Explorer, or to package Netscape's Navigator browser with Windows 98.
  • The government officials stated that their goal is to create options for consumers, not to restrict them, and that they are seeking to force Microsoft to change its business practices.
  • The suits also accuse Microsoft of using its control over the Windows operating system to maintain its monopoly, and of engaging in exclusionary contracts with Internet service providers to favor its own products and services.
  • Microsoft's chairman, William H. Gates, said that the company is committed to delivering high-quality products and that the suits are a step backward for America.
  • The state and federal suits also seek to end "exclusionary contracts with providers of Internet and on-line services" that are intended to make them favor Microsoft products and services.

Statistics:

  • Microsoft's share of sales of office productivity suites has increased since 1995, with Office accounting for over 85% of all sales by calendar year 1995.
  • Microsoft Office has been installed on over 70% of new computers sold in the United States (Source: Microsoft).
  • The government has asked the court to issue a preliminary injunction to stop Microsoft's practices described in the suits immediately (Source: Associated Press).
  • Microsoft has shipped the final version of Windows 98 to computer manufacturers and expects to sell it in stores beginning June 25 (Source: Microsoft).

Sources:

  • "Microsoft Sued in Antitrust Case" by the New York Times.
  • "Antitrust Suits File Against Microsoft" by the Associated Press.
  • "Microsoft Sued by 20 State Attorneys General" by the Washington Post.
  • "Microsoft's Gates Denies Antitrust Charges" by the Reuters News Service.