U.S. v. Microsoft Corp., CIV. A. 98-1232(TPJ).

• Decision Date: 05 November 1999
• Docket Number: No. CIV. A. 98-1233(TPJ).,No. CIV. A. 98-1232(TPJ).,CIV. A. 98-1232(TPJ).,CIV. A. 98-1233(TPJ).
• Citation: 84 F.Supp.2d 9
• Parties: UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant. State of New York, ex rel. Attorney General Eliot Spitzer et al., Plaintiffs and Counterclaim-Defendants, v. Microsoft Corporation, Defendant and Counterclaim-Plaintiff.
• Court: U.S. Court of Appeals — District of Columbia Circuit

84 F.Supp.2d 9

UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant.

State of New York, ex rel. Attorney General Eliot Spitzer et al., Plaintiffs and Counterclaim-Defendants, v. Microsoft Corporation, Defendant and Counterclaim-Plaintiff.

No. CIV. A. 98-1232(TPJ).

No. CIV. A. 98-1233(TPJ).

United States District Court, District of Columbia.

November 5, 1999.

COPYRIGHT MATERIAL OMITTED

Dennis C. Vacco, Attorney General of the State of New York, New York, NY, Christopher Crook, U.S. Dept. of Justice, San Francisco, CA, A. Douglas Melamed, U.S. Dept. of Justice, Washington DC, for plaintiff United States in case 1:98cv01232.

Alan R. Kusinitz, Attorney General of the State of New York, New York, NY, for plaintiffs in case 1:98cv01233.

David Paul Murray, Willkie Farr & Gallagher, Washington, DC, for movant Bloomberg News.

Daryl Andrew Libow, Sullivan & Cromwell, Washington, DC, John Lehman Warden, Sullivan & Cromwell, New York, NY, for defendant Microsoft Corp.

Donald Manwell Falk, Mayer, Brown & Platt, Washington, DC for Network Computer Inc.

Joseph Jay Simons, Rogers & Wells, L.L.P., Washington, DC for Sun Microsystems, Inc.

Samuel R. Miller, Folger, Levin & Kahn, L.L.P., San Francisco, CA, and Trisa Jean Thompson, Dell Computer Corporation, Round Rock, TX, for Dell Computer Corporation.

Junius Carlisle McElveen, Jr., Jones, Day, Reavis & Pogue, Washington, DC for IBM.

Allen Roger Snyder, Hogan & Hartson, L.L.P., Washington, DC for movant Netscape Communications Corp.

Lee J. Levine, Levine Sullivan & Koch, LLP, Washington, DC, for movants Seattle Times, ZDTV, ZDNET, The Washington Post Co., Associated Press, Dow Jones & Co., New York Times Co., American Lawyer Media, and USA Today.

Niki Kuckes, Miller, Cassidy, Larroca & Lewin, L.L.P., Washington DC for movant Reuter America, Inc.

Robert A. Gutkin, Pillsbury, Madison & Sutro, L.L.P., Washington, DC for movant San Jose Mercury News, Inc.

Jerry L. Robinett and Roy A. Day, movants pro se.

Richard Joseph Favretto, Mayer, Brown & Platt, Washington, DC for movant Oracle Corp.

William Dean Coston, Venable, Baetjer, Howard & Civiletti, L.L.P., Washington, DC for movant Compaq Computer Corp.

Benjamin S. Sharp, Perkins, Cote, L.L.P., Washington DC for movant Boeing Co.

Jay Ward Brown, Levine Sullivan & Koch, L.L.P., Washington, DC for movant Associated Press.

Carl Richard Schenker, Jr., O'Melveny & Myers, L.L.P., Washington, DC for movant Bristol Technology Inc.

Robert Stephen Berry, Berry & Leftwich, Washington, DC for movant Gravity, Inc.

JACKSON, District Judge.

FINDINGS OF FACT

These consolidated civil antitrust actions alleging violations of the Sherman Act, §§ 1 and 2, and various state statutes by the defendant Microsoft Corporation were tried to the Court, sitting without a jury, between October 19, 1998, and June 24, 1999. The Court has considered the record evidence submitted by the parties, made determinations as to its relevancy and materiality, assessed the credibility of the testimony of the witnesses, both written and oral, and ascertained for its purposes the probative significance of the documentary and visual evidence presented. Upon the record before the Court as of July 28, 1999, at the close of the admission of evidence, pursuant to Fed.R.Civ.P. 52(a), the Court finds the following facts to have been proved by a preponderance of the evidence. The Court shall state the conclusions of law to be drawn therefrom in a separate Memorandum and Order to be filed in due course.

I. BACKGROUND

1. A "personal computer" ("PC") is a digital information processing device designed for use by one person at a time. A typical PC consists of central processing components (e.g., a microprocessor and main memory) and mass data storage (such as a hard disk). A typical PC system consists of a PC, certain peripheral input/output devices (including a monitor, a keyboard, a mouse, and a printer), and an operating system. PC systems, which include desktop and laptop models, can be distinguished from more powerful, more expensive computer systems known as "servers," which are designed to provide data, services, and functionality through a digital network to multiple users.

2. An "operating system" is a software program that controls the allocation and use of computer resources (such as central processing unit time, main memory space, disk space, and input/output channels). The operating system also supports the functions of software programs, called "applications," that perform specific user-oriented tasks. The operating system supports the functions of applications by exposing interfaces, called "application programming interfaces," or "APIs." These are synapses at which the developer of an application can connect to invoke pre-fabricated blocks of code in the operating system. These blocks of code in turn perform crucial tasks, such as displaying text on the computer screen. Because it supports applications while interacting more closely with the PC system's hardware, the operating system is said to serve as a "platform."

3. An Intel-compatible PC is one designed to function with Intel's 80×86/Pentium families of microprocessors or with compatible microprocessors manufactured by Intel or by other firms.

4. An operating system designed to run on an Intel-compatible PC will not function on a non-Intel-compatible PC, nor will an operating system designed for a non-Intel-compatible PC function on an Intel-compatible one. Similarly, an application that relies on APIs specific to one operating system will not, generally speaking, function on another operating system unless it is first adapted, or "ported," to the APIs of the other operating system.

5. Defendant Microsoft Corporation is organized under the laws of the State of Washington, and its headquarters are situated in Redmond, Washington. Since its inception, Microsoft has focused primarily on developing software and licensing it to various purchasers.

6. In 1981, Microsoft released the first version of its Microsoft Disk Operating System, commonly known as "MS-DOS." The system had a character-based user interface that required the user to type specific instructions at a command prompt in order to perform tasks such as launching applications and copying files. When the International Business Machines Corporation ("IBM") selected MS-DOS for pre-installation on its first generation of PCs, Microsoft's product became the predominant operating system sold for Intel-compatible PCs.

7. In 1985, Microsoft began shipping a software package called Windows. The product included a graphical user interface, which enabled users to perform tasks by selecting icons and words on the screen using a mouse. Although originally just a user-interface, or "shell," sitting on top of MS-DOS, Windows took on more operating-system functionality over time.

8. In 1995, Microsoft introduced a software package called Windows 95, which announced itself as the first operating system for Intel-compatible PCs that exhibited the same sort of integrated features as the Mac OS running PCs manufactured by Apple Computer, Inc. ("Apple"). Windows 95 enjoyed unprecedented popularity with consumers, and in June 1998, Microsoft released its successor, Windows 98.

9. Microsoft is the leading supplier of operating systems for PCs. The company transacts business in all fifty of the United States and in most countries around the world.

10. Microsoft licenses copies of its software programs directly to consumers. The largest part of its MS-DOS and Windows sales, however, consists of licensing the products to manufacturers of PCs (known as "original equipment manufacturers" or "OEMs"), such as the IBM PC Company and the Compaq Computer Corporation ("Compaq"). An OEM typically installs a copy of Windows onto one of its PCs before selling the package to a consumer under a single price.

11. The Internet is a global electronic network, consisting of smaller, interconnected networks, which allows millions of computers to exchange information over telephone wires, dedicated data cables, and wireless links. The Internet links PCs by means of servers, which run specialized operating systems and applications designed for servicing a network environment.

12. The World Wide Web ("the Web") is a massive collection of digital information resources stored on servers throughout the Internet. These resources are typically provided in the form of hypertext documents, commonly referred to as "Web pages," that may incorporate any combination of text, graphics, audio and video content, software programs, and other data. A user of a computer connected to the Internet can publish a page on the Web simply by copying it into a specially designated, publicly accessible directory on a Web server. Some Web resources are in the form of applications that provide functionality through a user's PC system but actually execute on a server.

13. Internet content providers ("ICPs") are the individuals and organizations that have established a presence, or "site," on the Web by publishing a collection of Web pages. Most Web pages are in the form of "hypertext"; that is, they contain annotated references, or "hyperlinks," to other Web pages. Hyperlinks can be used as cross-references within a single document, between documents on the same site, or between documents on different sites.

14. Typically, one page on each Web site is the "home page," or the first access point to the site. The home page is usually a hypertext document that presents an overview of the site and hyperlinks to the other pages comprising the site.

15. PCs typically connect to the Internet through the services of Internet access providers ("IAPs"), which generally charge subscription fees to their customers in the United States. There are two types of IAPs. Online services ("OLSs") such as America Online ("AOL"), Prodigy, and the Microsoft Network ("MSN") offer, in addition to...