InfoWorld wrote that it  is widely recognized as the most influential company in the microcomputer-software industry. Some insiders say Microsoft is attempting to be the IBM of the software industry. The commissioners deadlocked with a 2—2 vote in and closed the investigation, but the Department of Justice led by Janet Reno opened its own investigation on August 21 of that year, resulting in a settlement on July 15, in which Microsoft consented not to tie other Microsoft products to the sale of Windows but remained free to integrate additional features into the operating system.
Microsoft also argues that "substantial consumer confusion and disappointment would result if new personal computers arrived with various advertised features of Windows altered or deleted in various ways unintended by Microsoft. For two reasons, this argument does not justify the exclusionary restrictions in the OEM agreements.
Significant factual issues exist as to whether the restrictions challenged by the plaintiffs were designed to advance Microsoft's asserted interest.
Internal Microsoft documents show that Microsoft began serious efforts to enforce and augment its exclusionary provisions only Page 43 Second, Microsoft could have achieved the objective of preventing consumer confusion through substantially less anticompetitive means.
Any legitimate interest in avoiding "consumer confusion and disappointment," see MS Memo at 58, could be met by requiring disclosure when OEMs remove the means of using Page 44 Internet Explorer to browse the Web.
OEMs vigorously compete against one another by advertising to end users the particular features of the machines they sell; many OEMs allow end- users to choose the precise components of their PCs, including the preinstalled software; 18 and because the OEM market is competitive, OEMs that cause user "confusion and disappointment" would be punished by fewer sales, There is every reason, therefore, to believe that a labeling requirement can prevent customer disappointment without inflicting the competitive harm caused by Microsoft's exclusionary license provisions.
For similar reasons, Microsoft's restrictions cannot be sustained on the theory that they "preserve Microsoft's reputation as a supplier of quality operating system software. OEMs have no incentive to engage in conduct that will cause consumer confusion or otherwise impair Microsoft's goodwill.
OEMs not only bear their own support costs and face vigorous competition, but also bear the costs of customer support calls directed to Microsoft, as Microsoft refers customer calls to the pertinent OEM. Thus, Microsoft's contention, MS Memo at 58, that its reputation, not the OEMs', would "suffer if Windows did not perform as represented" by Microsoft misses the point; the very structure Microsoft has created quite aside from its contractual restrictions is designed to ensure that OEMs take actions consistent with preserving Microsoft's reputation.
Moreover, the facts simply do not support Microsoft's contention that lifting the Page 45 challenged restrictions threatens to tarnish the Windows brand. Permitting OEMs to promote browsers and to provide browser choice in the boot-up sequence no more threatens Microsoft's reputation than Microsoft's decision to permit OEMs to provide in that sequence their own ISP sign-up software.
Nor does permitting OEMs to vary the size of shapes and icons, which Microsoft permits when the OEM ships the "active desktop" enabled but with respect to the "classic" desktop screen. Of course, even if Microsoft's conduct were consistent with respect to the claimed justification, a labeling requirement, as discussed above, would along with ordinary OEM incentives to minimize costs and seek to meet consumer demand suffice to prevent any reputational injury to Microsoft from OEM removal of the means of using Internet Explorer to browse the web, removal of the On-Line Services Folder, or addition of a choice of user interface in the initial boot-up sequence.
Finally, Microsoft cannot argue that its screen restrictions are justified because they simply reflect ordinary business practice typical of those used in a competitive market.
First, as already noted, this argument simply does not apply here because of Microsoft's uncontested monopoly power. Second, the factual reality is that, far from using practices similar to Microsoft, other operating system vendors commonly allow significantly more customization than Microsoft.
Microsoft's courthouse conversion suggests, at the very least, both that Microsoft has no legitimate need for those provisions and that it recognizes their doubtful legality.
To the contrary, "[i]t is the duty of the courts to beware of efforts to defeat injunctive relief by protestations of repentance and reform. There are several flaws in Microsoft's mootness argument. In the first place, Microsoft has not waived all of its exclusionary agreements.
While it announced last March -- the night before Mr. Gates testified before Congress about the agreements -- that it was waiving the restrictive provisions, it in fact waived some provisions, modified but did not entirely abandon others, and Page 47 left some agreements -- including the exclusionary provisions in its agreement with AOL, which is by far the largest and most important ISP -- entirely unchanged.
In any event, it is plain that this Court retains jurisdiction to pass on the legality of even the "waived" practices because those practices caused anticompetitive effects that are within the court's power to remedy. SeeNorthwestern Environmental Defense Center v.February 2, A government lawyer accuses Microsoft of manipulating videotaped evidence in a courtroom demo.
January 13, The defense phase of the trial begins. January 12, The final day of the government's case. AOL's Netscape sues Microsoft. The Netscape division of AOL Time Warner files suit against Microsoft, claiming harm from the software giant's business practices during the browser wars of the s.
Microsoft Corporation, leading developer of personal-computer software systems and applications. The company also publishes books and multimedia titles, produces its own line of hybrid tablet computers, offers e-mail services, and sells electronic game systems, computer peripherals (input/output devices), and portable media players.
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The U.S. Department of Justice announced that it had been instructed by the Bush Administration to cease its drive to break up Microsoft, which has already been found guilty of violating U.S. anti-trust law in a complaint filed by the Federal Government and 19 states. Currently, Microsoft will have restrictions imposed until a higher court affirms the ruling.
This process could take a year or longer. Microsoft is confident that a higher court will not affirm the ruling. If Microsoft loses the case, it will have a huge impact on the software industry and the nation as a whole.