Information Technology and American Business - Antitrust Litigation

Throughout American history, technological innovation has tended to give rise to the formation of monopolies. Those companies that create a widespread demand and a standard for new technologies often become the only producer of that technology, shutting down further competition in that industry. Since the passage of the Sherman Antitrust Act in 1890, companies in the private sector have been forbidden from blocking competitors from entering the market. If a company grows large enough and powerful enough to keep competitors out of the market and become a monopoly, then the U.S. Justice Department typically intervenes and either reaches a settlement with said company or files an antitrust suit and takes the company to court. The idea behind these laws is that monopolies reduce competition, which hinders economic progress and innovation. While this law may appear easy to understand, the courts and the Justice Department have to weigh a number of factors before breaking up a monopoly, including the negative affects the ruling may have on consumers.

In 1998 the Justice Department and the attorneys general of twenty states filed an antitrust suit against Microsoft. Along with other charges, the government claimed that Microsoft violated antitrust law when it integrated its Internet Explorer web browser software with Windows. At the time, Windows was the only operating system widely available for the PC. When Microsoft integrated Internet Explorer and Windows, other Web browsers such as Netscape could not compete. The Justice Department maintained that this act created unfair competition for those other companies who made browsers for PC systems. Microsoft claimed that the Internet Explorer was now part of Windows and that separating the two would destroy the most current versions of the operating system and years of development on their part.

On November 5, 1999, U.S. District Court Judge Thomas Penfield Jackson presented a preliminary ruling, which asserted that Microsoft did have a monopoly with their PC operating system and that the monopoly prevented fair competition among companies making software for personal computers. Five months later on April 3, 2000, the judge gave his final ruling, ordering that Microsoft should be split into two separate units—one that would produce the operating system and one that would produce other software components such as Internet Explorer. Microsoft immediately appealed, and the case went to the federal appeals court under Judge Colleen Kollar-Kotelly. In the midst of the judicial review, the White House administration changed, and the U.S. Justice Department, now led by John Ashcroft, came to an agreement with Microsoft that did not involve the breakup of the company. However, several of the states continued to battle the software giant in court. On November 1, 2002, Kollar-Kotelly decided that the company should not be broken up and should follow the agreement laid down by the Justice Department and accepted by the attorneys general of Illinois, Kentucky, Louisiana, Maryland, Michigan, New York, North Carolina, Ohio, and Wisconsin. Additional remedies proposed by California, Connecticut, the District of Columbia, Iowa, Florida, Kansas, Massachusetts, Minnesota, Utah, and West Virginia were dismissed. The agreement required Microsoft to take a number of steps that would allow competitors to once again compete in the market. Among these provisions, Microsoft was required to give computer makers the option of removing Internet Explorer and other Microsoft programs that sit on top of the Windows operating system. Microsoft was also forced to reveal details about the Windows operating system that would allow makers of other software to better integrate software with Windows.