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This was published 17 years ago

Microsoft largely unscathed after US antitrust ordeal

Microsoft emerged largely unscathed from a long antitrust ordeal in the United States, as it successfully overturned on appeal a judge's ruling that would have broken up the world's biggest software firm.

Yet Microsoft has had to pay hefty damages to rivals and remains under court supervision. One issue before the court is a complaint from rival Google, which ironically is seen by some analysts as the new dominant force in the tech sector.

After years of litigation, Microsoft agreed to a settlement calling for court supervision, and to disclose more technical information to its rivals. The deal also barred anti-competitive agreements on Microsoft products.

The 2002 US settlement did not require Microsoft to pay a fine, but the finding that it abused its monopoly position in the software market opened it to private lawsuits, and the Redmond, Washington, firm paid over four billion US dollars in settlements.

Microsoft's Windows operating system is still used for some 92 percent of personal computers worldwide, about the same percentage as in 1993.

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But Microsoft argues that it remains in a tough battle for market share in new technologies like mobile devices, and faces the juggernauts of Google and Yahoo in key areas such as Internet search and advertising.

The anti-competition case for Microsoft began in 1990 when the Justice Department opened its first case against the group over its dominance of PC operating systems. That was settled in 1994 with Microsoft agreeing to end a number of contested business practices.

The case was effectively reopened in 1997 when US authorities contended Microsoft, by incorporating its Internet Explorer in the Windows operating system for the first time, was trying to crush competition from Netscape, a rising star of the early Internet.

A formal complaint was filed in 1998 by the Department of Justice, joined by a number of US states.

While the case was pending, Microsoft won the "browser war" and Netscape was sold to AOL, which later became part of Time Warner.

A shock ruling on April 3, 2000 by Judge Thomas Penfield Jackson found Microsoft guilty of antitrust violations and ordered the company be broken up into two entities, one for operating systems and a separate firm for other software.

But a year later, a federal appeals court reversed Jackson's order and removed him from the case, although it let stand the finding that Microsoft acted as an illegal monopoly.

The case was concluded with a settlement between Microsoft and the Justice Department in November 2001, and was approved by a federal judge a year later.

The settlement imposed no financial penalty, but it forced billionaire Bill Gates's software giant to disclose more technical information and barred anti-competitive agreements on Microsoft products.

In private lawsuits stemming from the case, Microsoft paid 1.6 billion US dollars to Sun Microsystems, 750 million to AOL Time Warner and 761 million to RealNetworks, among the companies who alleged they were hurt by Microsoft's conduct.

Federal Judge Colleen Kollar-Kotelly continues to supervise the settlement, which originally was for five years. Microsoft agreed to extend certain provisions through 2009, although some states have asked for the supervision to continue into 2012.

One issue before the court, ironically, stems from a claim from Google that Microsoft's desktop search feature in its new Windows Vista operating system may harm a competing service from Google.

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Original URL: https://www.smh.com.au/national/microsoft-largely-unscathed-after-us-antitrust-ordeal-20070914-gdr3wc.html