BBC News Online: In Depth: Microsoft

Microsoft broke anti-trust law

In his ruling, District Court Judge Thomas Penfield Jackson concluded that Microsoft had maintained its monopoly power by anticompetitive means and had also attempted to monopolise the internet browser market.

He said the company violated the Sherman anti-trust act by unlawfully tying its internet browser to its Windows operating system.

Talks aimed at settling the anti-trust case brought against Microsoft by the US Government broke down at the weekend.

Trading in Microsoft shares was halted after the close of regular trade on Monday ahead of the publication of the ruling.

The shares had closed down 15 3/8, or more than 15% at 90 7/8.

The company said it would appeal against the ruling and it was confident that the courts would ultimately rule in its favour.

"We will seek an expedited appeal of this ruling," Microsoft spokesman Tom Pilla said.

Justice Department anti-trust chief Joel Klein said the decision would "benefit consumers and stimulate competition and innovation in the high tech industry."

He said the landmark opinion would set the ground rules for the industry.

The charge sheet

Microsoft was accused of using its domination of the operating system market to restrict competition.

The judge heard from a succession of rivals how they were threatened or rewarded by Microsoft in its attempts to maintain or build domination of software, operating systems and internet browser markets.

Judge Jackson issued his preliminary findings of fact last November in a ruling which essentially found that Microsoft had abused its market dominance.

Since then there have been on-going talks aimed at reaching an out of court settlement.

Deadlock likely

The judge's final ruling, on whether Microsoft's behaviour has broken anti-trust laws, has been delayed a number of times to give these talks a chance.

However, after the weekend breakdown of talks, the trial judge decided there was little chance of getting an agreed deal.

The court appointed mediator, Richard Posner, a chief judge with the US Court of Appeal, said that "the quest has proved fruitless", adding that the differences between the two sides "were too deep-seated to be bridged".

Settlement offer

Microsoft chairman Bill Gates had expressed his willingness to reach a deal out of court.

Two weeks ago, Microsoft sent a detailed settlement proposal to government lawyers in which it agreed to:

• Sell a version of Windows that does not have its web browser, Internet Explorer, integrated with the operating system.
• Charge a standard, uniform price for Windows.
• Open access to other software makers of more of the code of Windows, also called application program interfaces or APIs.
• Apply the settlement not only to consumer versions of Windows, such as Windows 95 and 98, but also to its corporate operating system, previously known as Windows NT but now named Windows 2000.

But government sources reported that this "final, final offer" was wholly inadequate.