View source for United States v. Microsoft Corp.

{{Short description|2001 American antitrust law case}}
{{About|the 2001 antitrust lawsuit|other cases with similar names|United States v. Microsoft Corp. (disambiguation)}}
{{Use American English|date=February 2026}}
{{Use mdy dates|date=February 2015}}
{{Infobox COA case
  |Litigants=United States v. Microsoft Corp.
  |Court=[[United States Court of Appeals for the District of Columbia Circuit]]
  |ArgueDate=February 26–27,
  |ArgueYear= 2001
  |DecideDate=June 28,
  |DecideYear=2001
  |FullName=United States of America v. Microsoft Corporation
  |Citations=253 [[F.3d]] [https://law.justia.com/cases/federal/appellate-courts/F3/253/34/576095/ 34]
  |Prior=''United States v. Microsoft Corp.'', 87 [[F. Supp. 2d]] [https://law.justia.com/cases/federal/district-courts/FSupp2/87/30/2307082/ 30] ([[D.D.C.]] 2000); 97 [[F. Supp. 2d]] [https://law.justia.com/cases/federal/district-courts/FSupp2/97/59/2339529/ 59] (D.D.C. 2000), ''direct appeal denied, pet. cert. denied'', {{ussc|530|1301|2000|el=no}}.
  |Subsequent=''Microsoft Corp. v. United States'', {{ussc|534|952|2001|el=no}} (''pet. cert. denied''); 224 [[F. Supp. 2d]] [https://www.leagle.com/decision/2002300224fsupp2d761291 76] (D.D.C. 2002); 231 [[F. Supp. 2d]] [https://www.leagle.com/decision/2002375231fsupp2d1441362 144] (D.D.C. 2002) (on remand), ''aff'd in part and rev'd in part'', 373 [[F.3d]] [https://law.justia.com/cases/federal/appellate-courts/F3/373/1199/474311/ 1199] (D.C. Cir. 2004)
  |Holding=Business practices conducted by [[Microsoft]], when [[tying (commerce)|tying]] its web browser and operating system, was monopolistic behavior per the [[Sherman Antitrust Act]].
  |Judges=[[Harry T. Edwards]], CJ; [[Stephen F. Williams]], [[Douglas H. Ginsburg]], [[David B. Sentelle]], [[A. Raymond Randolph]], [[Judith W. Rogers]], and [[David S. Tatel]], JJ.
  |PerCuriam=yes
  |Majority=
  |JoinMajority=
  |Concurrence=
  |JoinConcurrence=
  |Dissent=
  |JoinDissent=
  |LawsApplied=[[Sherman Antitrust Act]]
|image=File:Seal of the Court of Appeals for the District of Columbia.png}}
'''''United States of America v. Microsoft Corporation''''', 253 F.3d 34 (D.C. Cir. 2001), was a [[Lists of landmark court decisions|landmark]] American [[antitrust law]] case at the [[United States Court of Appeals for the District of Columbia Circuit]]. The [[U.S. government]] accused [[Microsoft]] of illegally [[Monopolization|monopolizing]] the [[web browser]] market for [[Microsoft Windows|Windows]], primarily through the legal and technical restrictions it put on the abilities of PC manufacturers ([[original equipment manufacturer|OEMs]]) and users to uninstall [[Internet Explorer]] and use other programs such as [[Netscape Navigator|Netscape]] and [[Java (software platform)|Java]].<ref name=":0">{{cite court |litigants=United States v. Microsoft Corp. |vol=253 |reporter=F.3d |opinion=34 |court=[[D.C. Cir.]] |date=2001 |url=https://law.justia.com/cases/federal/appellate-courts/F3/253/34/576095/ |access-date=2018-06-10 |archive-date=September 20, 2023 |archive-url=https://web.archive.org/web/20230920101244/https://law.justia.com/cases/federal/appellate-courts/F3/253/34/576095/ |url-status=live }}</ref>

At the initial trial which began in 1998, the [[United States District Court for the District of Columbia]] ruled that Microsoft's actions constituted unlawful monopolization under Section 2 of the [[Sherman Antitrust Act of 1890]],<ref name=":1" /> but the U.S. Court of Appeals for the D.C. Circuit partially overturned that judgment in 2001.<ref name=":0" /> The two parties later reached a [[Settlement (litigation)|settlement]] in which Microsoft agreed to modify some of its business practices.<ref name=":4" />

==History==
By 1984 Microsoft was one of the most successful software companies, with $55&nbsp;million in 1983 sales. ''[[InfoWorld]]'' wrote:<ref name="caruso19840402">{{cite news | url=https://books.google.com/books?id=kC4EAAAAMBAJ&pg=PA80 | title=Company Strategies Boomerang | work=InfoWorld | date=1984-04-02 | access-date=10 February 2015 | author=Caruso, Denise | pages=80–83}}</ref>

{{blockquote|[Microsoft] is widely recognized as the most influential company in the microcomputer-software industry. Claiming more than a million installed [[MS-DOS]] machines, founder and chairman [[Bill Gates]] has decided to certify Microsoft's jump on the rest of the industry by dominating [[List of Microsoft software|applications, operating systems]], [[Microsoft hardware|peripherals]] and, most recently, [[Microsoft Press|book publishing]]. Some insiders say Microsoft is attempting to be the [[IBM]] of the software industry.

Although Gates says that he isn't trying to dominate the industry with sheer numbers, his strategy for dominance involves Microsoft's new [[Windows]] operating system ... "Our strategies and energies as a company are totally committed to Windows, in the same way that we're committed to operating-system kernels like MS-DOS and [[Xenix]]," says Gates. "We're also saying that only applications that take advantage of Windows will be competitive in the long run."}}

Softletter estimated that in 1986 Microsoft had 8% (more than $250 million) of total revenue of the top 100 microcomputer software companies. Of the 15 million Americans who used a personal computer in their job, more than 90% used MS-DOS.<ref name="computerworld19871102">{{Cite magazine |date=1987-11-02 |title=Lining up behind three visionaries |url=https://books.google.com/books?id=mUSIMiurpfYC&pg=PP69 |access-date=2025-06-08 |magazine=Computerworld |page=SR3 |volume=XXI |issue=44}}</ref> Gates said in 1984 that applications such as [[Multiplan]] and [[Microsoft Word|Word]] were ''InfoWorld'' said, "not a big-time operation",{{r|caruso19840402}} but by 1987, Richard A. Shaffer of ''Technologic Computer Letter'' compared the company's dominance of operating systems, and consequent benefit to its application software, to a baseball game in which "Microsoft owns all the bats and the field".<ref name="barney19871102">{{Cite magazine |last=Barney |first=Douglas |date=1987-11-02 |title=Balancing on the high wire of Microsoft's success |url=https://books.google.com/books?id=mUSIMiurpfYC&pg=PP81 |access-date=2025-06-08 |magazine=Computerworld |page=SR15 |volume=XXI |issue=44}}</ref> The [[Federal Trade Commission]] began an inquiry in 1990 over whether Microsoft was abusing its monopoly in the PC operating system market.<ref>{{cite web |title=Memorandum Opinion : U.S. V. Microsoft Corp. |url=https://www.justice.gov/atr/memorandum-opinion-us-v-microsoft-corp |publisher=United States Department of Justice |access-date=1 June 2023 |date=August 14, 2015 |archive-date=June 1, 2023 |archive-url=https://web.archive.org/web/20230601082406/https://www.justice.gov/atr/memorandum-opinion-us-v-microsoft-corp |url-status=live }}</ref> The commissioners deadlocked with a 2–2 vote in 1993 and closed the investigation, but the [[United States Department of Justice|Department of Justice]] (DOJ), led by [[Janet Reno]], opened its own investigation later that year, resulting in a [[Settlement (litigation)|settlement]] on July 15, 1994, in which Microsoft consented not to tie other Microsoft products to the sale of [[Microsoft Windows|Windows]] but remained free to integrate additional features into the operating system. In the years that followed, Microsoft insisted that [[Internet Explorer]] (IE) was not a ''product'' but a ''feature'' that it was allowed to add to Windows, although the DOJ did not agree with this definition.<ref name="Facts">{{cite court |litigants=United States v. Microsoft Corp. |opinion=98-CV-1232, 98-CV-1233 |court=[[D.D.C.]] |date=Nov. 5, 1999 |url=https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact |access-date=2018-06-10 |archive-date=February 2, 2021 |archive-url=https://web.archive.org/web/20210202173115/https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact |url-status=live }}</ref>

The government alleged that Microsoft had abused monopoly power on [[Intel]]-based personal computers in its handling of [[operating system]] and [[web browser]] integration. The central issue was whether Microsoft was allowed to bundle its IE web browser software with its Windows operating system. Bundling the two products was allegedly a key factor in Microsoft's victory in the [[browser wars]] of the late 1990s, as every Windows user had a copy of IE. It was further alleged that this restricted the market for competing web browsers (such as [[Netscape Navigator]] or [[Opera (web browser)|Opera]]), since it typically took extra time to buy and install the competing browsers. Underlying these disputes were questions of whether Microsoft had manipulated its [[application programming interface]]s to favor IE over third-party browsers. The government also questioned Microsoft's conduct in enforcing restrictive licensing agreements with [[original equipment manufacturer]]s who were required to include that arrangement.<ref name=":2" />

Microsoft argued that the merging of Windows and IE was the result of [[innovation]] and competition, that the two were now the same product and inextricably linked, and that consumers were receiving the benefits of IE for free. Opponents countered that IE was still a separate product that did not need to be tied to Windows, since a separate version of IE was available for [[Classic Mac OS|Mac OS]]. They also asserted that IE was not really free because its development and marketing costs may have inflated the price of Windows.<ref name=":2" />

[[Bill Gates]] himself denied that Microsoft was a monopoly, stating "Microsoft follows the rules. Microsoft is subject to the rules." He further compared the situation with [[IBM]] thirty years prior: "People who feared IBM were wrong. Technology is ever-changing."<ref>{{Cite web |title=Gates stands tough - Mar. 3, 1998 |url=https://money.cnn.com/1998/03/03/technology/gates/ |access-date=2023-10-26 |website=money.cnn.com |archive-date=October 26, 2023 |archive-url=https://web.archive.org/web/20231026115614/https://money.cnn.com/1998/03/03/technology/gates/ |url-status=live }}</ref>

==District Court trial==
The case was initially tried before Judge [[Thomas Penfield Jackson]] at the [[United States District Court for the District of Columbia]]. The suit began on May 18, 1998, with the [[Department of Justice]] joined by the Attorneys General of twenty U.S. states and the [[District of Columbia]]. The case organized by the Department of Justice was focused less on interoperability, and more on [[Predatory pricing|predatory]] strategies and market [[barriers to entry]]; the DOJ built upon the allegation that Microsoft forced computer makers to include its [[web browser]] as a part of the installation of Windows software.<ref name=":2">{{cite web |date=February 10, 2014 |title=The Microsoft case by the numbers: comparison between U.S. and E.U. |url=https://leconcurrentialiste.com/2014/02/10/the-microsoft-case-by-the-numbers-comparison-between-u-s-and-e-u/ |access-date=February 6, 2015 |work=Le Concurrentialiste |archive-date=May 14, 2015 |archive-url=https://web.archive.org/web/20150514081332/http://leconcurrentialiste.com/2014/02/10/the-microsoft-case-by-the-numbers-comparison-between-u-s-and-e-u/ |url-status=dead }}</ref>

[[Bill Gates]] was called "evasive and nonresponsive" by a source present at his videotaped [[Deposition (law)|deposition]].<ref>{{cite web |last1=Kawamoto |first1=Dawn |title=Gates deposition called evasive |url=http://news.cnet.com/2100-1023-214993.html |website=CNET News |archive-url=https://archive.today/20120524145641/http://news.com.com/2100-1023-214993.html |archive-date=2012-05-24 |date=1998-08-28}}</ref> He argued over the definitions of words such as "compete", "concerned", "ask", and "we"; certain portions of the proceeding would later provoke laughter from the judge when an excerpted version was shown in court.<ref>{{cite news |url=http://www.cnn.com/TECH/computing/9811/17/judgelaugh.ms.idg/index.html |work=CNN |title=Gates deposition makes judge laugh in court |date=November 16, 1998 |access-date=May 27, 2010 |archive-date=September 2, 1999|archive-url=https://web.archive.org/web/19990902200311/http://www.infoworld.com/cgi-bin/displayStory.pl?981116.ecdeposition.htm }}</ref> ''[[Businessweek]]'' reported that "early rounds of his deposition show him offering obfuscatory answers and saying 'I don't recall' so many times that even the presiding judge had to chuckle. Many of Gates's denials and pleas of ignorance were directly refuted by prosecutors with snippets of e-mails Gates both sent and received."<ref name="neuborne">{{cite news|last=Neuborne|first=Ellen|title=Microsoft's Teflon Bill|url=http://www.businessweek.com/1998/48/b3606125.htm|archive-url=https://web.archive.org/web/19991202035458/http://www.businessweek.com/1998/48/b3606125.htm|url-status=dead|archive-date=December 2, 1999|access-date=March 19, 2013|newspaper=Businessweek|date=November 30, 1998}}</ref> [[Intel]] Vice-president [[Steven McGeady]], called as a witness, quoted [[Paul Maritz]], a senior Microsoft vice president, as having stated an intention to "[[Embrace, extend and extinguish|extinguish]]" and "smother" rival [[Netscape Communications Corporation]] and to "cut off Netscape's air supply" by giving away a [[Clone (computing)|clone]] of Netscape's flagship product for free.<ref>{{cite news | title=Microsoft Attacks Credibility of Intel Exec | first=Rajiv | last=Chandrasekaran | url=https://www.washingtonpost.com/wp-srv/business/longterm/microsoft/stories/1998/microsoft111398.htm | newspaper=The Washington Post | page=B1 | date=November 13, 1998 | access-date=May 27, 2010 | archive-date=February 5, 2012 | archive-url=https://web.archive.org/web/20120205182337/http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/stories/1998/microsoft111398.htm | url-status=live | df=mdy-all }}</ref>

A number of videotapes were submitted as evidence by Microsoft during the trial, including one that demonstrated that removing Internet Explorer from Microsoft Windows caused slowdowns and malfunctions in Windows. In the videotaped demonstration of what then-Microsoft vice president [[Jim Allchin]] stated to be a seamless segment filmed on one PC, the government noticed that some icons mysteriously disappeared and reappeared on the PC's [[Desktop environment|desktop]], suggesting that the effects might have been falsified.<ref>{{cite news|title=Buggy Video and More, Microsoft Is Going Backward|url=http://www.businessweek.com/microsoft/updates/up90203a.htm |archive-url=https://web.archive.org/web/19991103171910/http://www.businessweek.com/microsoft/updates/up90203a.htm |url-status=dead |archive-date=November 3, 1999 | work=Business Week | date=February 3, 1999 | access-date=December 12, 2014}}</ref> Allchin admitted that the blame for the tape problems lay with some of his staff. "They ended up filming it—grabbing the wrong screen shot," he said of the incident. Later, Allchin re-ran the demonstration and provided a new videotape, but in so doing Microsoft dropped the claim that Windows is slowed down when IE is removed. Mark Murray, a Microsoft spokesperson, complained about the government attorneys "nitpicking on issues like video production."<ref>{{Citation | last = McCullagh | first = Declan | title = Feds Accuse MS of Falsification | newspaper = Wired | date = February 2, 1999 | url = https://www.wired.com/news/politics/0,1283,17689,00.html | access-date = November 14, 2009 | archive-date = January 15, 2011 | archive-url = https://web.archive.org/web/20110115024801/http://www.wired.com/politics/law/news/1999/02/17689 | url-status = dead | df = mdy-all }}</ref> [[File:US v. Microsoft Bill Gates Color.png|thumb|Bill Gates during his August 27, 1998 deposition|left]]Microsoft later submitted a second inaccurate videotape into evidence. The issue was how easy or difficult it was for [[AOL|America Online]] users to download and install [[Netscape Navigator]] onto a Windows PC. Microsoft's videotape showed the process as being quick and easy, resulting in the Netscape icon appearing on the user's desktop. The government produced its own videotape of the same process, revealing that Microsoft's videotape had conveniently removed a long and complex part of the procedure and that the Netscape icon was not placed on the desktop, requiring a user to search for it. Brad Chase, a Microsoft vice president, verified the government's tape and conceded that Microsoft's own tape was falsified.<ref>{{cite magazine |last1=McCullagh |first1=Declan |title=Compaq: It Was All a Big Mix-Up |url=https://www.wired.com/1999/02/compaq-it-was-all-a-big-mix-up/|magazine=Wired |archive-url=https://web.archive.org/web/20201031232332/https://www.wired.com/1999/02/compaq-it-was-all-a-big-mix-up/ |archive-date=2020-10-31 |date=1999-02-16}}</ref>

When the judge suggested that Microsoft offer a version of Windows that did not include Internet Explorer, Microsoft responded that the company would offer manufacturers a choice: one version of Windows that was obsolete, or another that did not work properly. The judge asked, "It seemed absolutely clear to you that I entered an order that required that you distribute a product that would not work?" David Cole, a Microsoft vice president, replied, "In plain English, yes. We followed that order. It wasn't my place to consider the consequences of that."<ref>{{cite web |access-date=November 19, 2018 |url=http://www.richardnoble.com/microsoft-trial.htm |title=Retracing the Missteps in Microsoft's Defense at Its Antitrust Trial |archive-url=https://web.archive.org/web/20010503053902/http://www.richardnoble.com/microsoft-trial.htm |archive-date=May 3, 2001 |url-status=dead }}</ref>

Gates and his successor as CEO [[Steve Ballmer]] were so worried about the outcome of the case that they discussed leaving Microsoft "if they really screw the company that badly, really just split it up in a totally irrational way," Gates recalled.<ref name="leibovich20001231">{{Cite news |url=https://www.washingtonpost.com/archive/politics/2000/12/31/alter-egos/91b267b0-858c-4d4e-a4bd-48f22e015f70/ |title=Alter Egos |last=Leibovich |first=Mark |date=2000-12-31 |newspaper=Washington Post |access-date=2019-06-24 |archive-url=https://web.archive.org/web/20161225224631/https://www.washingtonpost.com/archive/politics/2000/12/31/alter-egos/91b267b0-858c-4d4e-a4bd-48f22e015f70/ |archive-date=2016-12-25 |language=en-US |issn=0190-8286 | url-access=subscription}}</ref> Microsoft defended itself in the public arena, arguing that its attempts to "innovate" were under attack by rival companies jealous of its success, and that government prosecutors were merely their pawns. A full-page ad appeared in ''[[The Washington Post]]'' and ''[[The New York Times]]'' on June 2, 1999, created by a think tank called [[The Independent Institute]]. The ad was presented as "An Open Letter to President Clinton from 240 Economists on Antitrust Protectionism." It said in part, "Consumers did not ask for these antitrust actions – rival business firms did. Consumers of high technology have enjoyed falling prices, expanding outputs, and a breathtaking array of new products and innovations. ... Increasingly, however, some firms have sought to handicap their rivals by turning to government for protection. Many of these cases are based on speculation about some vaguely specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S. firms and impede their competitiveness abroad."<ref>{{cite web |last1=Theroux |first1=David |title=Open Letter on Antitrust Protectionism |url=https://www.independent.org/news/article.asp?id=483 |website=The Independent Institute |archive-url=https://web.archive.org/web/20220217180351/https://www.independent.org/news/article.asp?id=483|archive-date=2022-02-17 |date=1999-06-02|access-date=2022-03-25|url-status=live}}</ref>

=== Judgment ===
Judge Jackson issued his [[Question of law|findings of fact]] on November 5, 1999, holding that Microsoft's dominance of the [[x86]]-based personal computer [[operating system]]s market constituted a [[monopoly]], and that Microsoft had taken actions to crush threats to that monopoly, including applications from [[Apple Inc.|Apple]], [[Java (software platform)|Java]], [[Netscape]], [[Lotus Software]], [[RealNetworks]], [[Linux]], and others.<ref>{{Cite web |date=2015-08-14 |title=Antitrust Division {{!}} U.S. V. Microsoft: Court's Findings Of Fact |url=https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact |access-date=2024-04-23 |website=www.justice.gov |language=en |archive-date=February 2, 2021 |archive-url=https://web.archive.org/web/20210202173115/https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact |url-status=live }}</ref> On April 3, 2000, Jackson issued his [[Question of law|conclusions of law]], holding that Microsoft had engaged in monopolization, attempted monopolization, and [[tying (commerce)|tying]] in violation of Sections 1 and 2 of the [[Sherman Antitrust Act]].<ref name=":1">{{cite court |litigants=United States v. Microsoft Corp. |vol=87 |reporter=F. Supp. 2d |opinion=30 |court=[[D.D.C.]] |date=2000 |url=https://law.justia.com/cases/federal/district-courts/FSupp2/87/30/2307082/ |access-date=2018-06-10 |archive-date=May 10, 2023 |archive-url=https://web.archive.org/web/20230510131749/https://law.justia.com/cases/federal/district-courts/FSupp2/87/30/2307082/ |url-status=live }}</ref>

On June 7, 2000, the District Court ordered a breakup of Microsoft as its remedy.<ref>{{cite court |litigants=United States v. Microsoft Corp. |vol=97 |reporter=F. Supp. 2d |opinion=59 |court=[[D.D.C.]] |date=2000 |url=https://law.justia.com/cases/federal/district-courts/FSupp2/97/59/2339529/ |access-date=2018-06-10 |archive-date=June 12, 2018 |archive-url=https://web.archive.org/web/20180612135957/https://law.justia.com/cases/federal/district-courts/FSupp2/97/59/2339529/ |url-status=live }}</ref> According to that judgment, Microsoft would have to be split into two separate units, one to produce the operating system and one to produce other software components.<ref name="timeline" /><ref>{{cite web|last=Ingram|first=Mike|title=U.S. Judge Orders Break-up of Microsoft|url=http://www.wsws.org/articles/2000/jun2000/micr-j09.shtml|work=World Socialist Web Site|publisher=International Committee of the Fourth International|date=June 9, 2000|access-date=February 24, 2012|archive-date=March 15, 2012|archive-url=https://web.archive.org/web/20120315090212/http://wsws.org/articles/2000/jun2000/micr-j09.shtml|url-status=live}}</ref> Microsoft immediately appealed the judgment to the [[United States Court of Appeals for the District of Columbia Circuit|D.C. Circuit Court of Appeals]].<ref name="timeline">{{cite magazine|title=''U.S. v. Microsoft'': Timeline|url=https://www.wired.com/techbiz/it/news/2002/11/35212|magazine=Wired |date=November 4, 2002 |archive-url=https://web.archive.org/web/20080614145526/https://www.wired.com/techbiz/it/news/2002/11/35212 |archive-date=June 14, 2008 |url-status=dead}}</ref>

==Appeals Court decision==
After Microsoft filed its appeal, the U.S. government and the states in the suit filed a [[Certiorari before judgment|petition for certiorari before judgment]], a process that would skip the intermediate Circuit Court and send the case directly to the [[Supreme Court of the United States|U.S. Supreme Court]]. Such an action is permitted by a section of the [[United States Code]]<ref name="253 F.3d at 48">''United States v. Microsoft Corp.'', [https://scholar.google.com/scholar_case?case=17987618389090921096#p48 253 F.3d 34, 48] {{Webarchive|url=https://web.archive.org/web/20200429063816/https://scholar.google.com/scholar_case?case=17987618389090921096#p48 |date=April 29, 2020 }} (D.C. Cir. 2001)</ref> that gives the Supreme Court jurisdiction to hear direct appeals from the District Court level in certain antitrust cases initiated by the federal government, if "the district judge who adjudicated the case enters an order stating that immediate consideration of the appeal by the Supreme Court is of general public importance in the administration of justice."<ref>{{USCSub|15|29|b}}</ref> The states also filed a petition for certiorari before judgment at the Supreme Court, requesting the same direct appeal process without going through the Circuit Court.<ref name="253 F.3d at 48" /><ref>{{cite web |last1=Russell |first1=Kevin |title=Overview of Supreme Court's cert. before judgment practice |url=http://www.scotusblog.com/2011/02/overview-of-supreme-court%E2%80%99s-cert-before-judgment-practice/ |website=[[SCOTUSblog]] |date=February 9, 2011 |access-date=15 June 2018 |archive-date=June 16, 2018 |archive-url=https://web.archive.org/web/20180616030317/http://www.scotusblog.com/2011/02/overview-of-supreme-court%E2%80%99s-cert-before-judgment-practice/ |url-status=live }}</ref> The Supreme Court rejected these requests and sent the appeal to the [[United States Court of Appeals for the District of Columbia Circuit|D.C. Circuit Court]].<ref name="253 F.3d at 48"/>

On June 28, 2001, the Circuit Court overturned Judge Jackson's rulings against Microsoft. This was partly because Jackson had [[News embargo|improperly discussed the case]] with the news media while it was still in progress, violating the [[code of conduct]] for American judges.<ref>{{Cite web |url=http://www.uscourts.gov/guide/vol2/ch1.html#3 |title=Judiciary Policies And Procedures: Codes Of Conduct<!-- Bot generated title --> |access-date=April 17, 2007 |archive-date=March 13, 2014 |archive-url=https://web.archive.org/web/20140313085547/http://www.uscourts.gov/guide/vol2/ch1.html#3 |url-status=dead }}</ref> The Circuit Court judges accused Jackson of unethical conduct and determined that he should have recused himself from the case. Thus the Circuit Court adopted a "drastically altered scope of liability" due to Jackson's conduct, which was favorable for Microsoft.<ref>{{cite magazine | url=https://www.wired.com/politics/law/news/2001/02/42071 | magazine=Wired | title=Microsoft Judge Ripped in Court | date=February 28, 2001 | access-date=March 12, 2017 | archive-date=November 18, 2012 | archive-url=https://web.archive.org/web/20121118231737/http://www.wired.com/politics/law/news/2001/02/42071 | url-status=live }}</ref>

Jackson's response was that Microsoft's conduct itself was the cause of any "perceived bias"; Microsoft executives had, according to him, "proved, time and time again, to be inaccurate, misleading, evasive, and transparently false. ... Microsoft is a company with an institutional disdain for both the truth and for rules of law that lesser entities must respect. It is also a company whose senior management is not averse to offering specious testimony to support spurious defenses to claims of its wrongdoing."<ref>{{cite web |last1=Thurrott |first1=Paul |title=Judge Jackson Exits Microsoft Discrimination Case |url=https://www.itprotoday.com/windows-78/judge-jackson-exits-microsoft-discrimination-case |website=Windows IT Pro |archive-url=https://web.archive.org/web/20201221133656/https://www.itprotoday.com/windows-78/judge-jackson-exits-microsoft-discrimination-case |archive-date=2020-12-21 |date=2001-03-14|access-date=2022-03-25}}</ref>

Ultimately, the Circuit Court overturned Jackson's holding that Microsoft should be broken up as an illegal monopoly. However, the Circuit Court did not overturn Jackson's findings of fact, and held that traditional [[United States antitrust law|antitrust]] analysis was not equipped to consider software-related practices like browser [[Tying (commerce)|tie-ins]].<ref>{{Bluebook journal | first=J. Gregory | last=Sidak | first2=David J. | last2=Teece | title=Dynamic Competition in Antitrust Law | volume=5 | journal=J. Competition L. & Econ. | page=581 | pin=621–22 | url=https://www.criterioneconomics.com/docs/dynamic-comp1.pdf | year=2009}}</ref> The case was remanded back to the D.C. District Court for further proceedings on this matter, with Judge [[Colleen Kollar-Kotelly]] presiding.<ref name=":3" />

==Settlement==
The Department of Justice, now under Bush administration attorney general [[John Ashcroft]], announced on September 6, 2001, that it was no longer seeking to break up Microsoft and would instead seek a lesser antitrust penalty. Microsoft decided to draft a [[Settlement (litigation)|settlement]] proposal allowing PC manufacturers to adopt non-Microsoft software.<ref name=":4">{{cite news|last=Wilke|first=John R.|title=Microsoft Drafts Settlement Proposal, Hoping to Resolve Antitrust Lawsuit|url=https://www.wsj.com/articles/SB1000076767888491506|newspaper=The Wall Street Journal|date=September 10, 2001|archive-url=https://web.archive.org/web/20010919223203/http://public.wsj.com/sn/y/SB1000076767888491506.html |archive-date=September 19, 2001}}</ref><ref>{{cite news |last1=Martinson |first1=Jane |title=Bush drops plan to break up Microsoft |url=https://www.theguardian.com/technology/2001/sep/07/microsoft.business |access-date=5 February 2026 |work=The Guardian |date=7 September 2001}}</ref><ref>{{cite news |last1=Knowlton |first1=Brian |title=Bush Administration Also Abandons Effort to Stop Software 'Bundling' : U.S. Will Not Pursue A Microsoft Breakup |url=https://www.nytimes.com/2001/09/07/IHT-bush-administration-also-abandons-effort-to-stop-software-bundling-us.html |access-date=5 February 2026 |work=The New York Times |agency=International Herald Tribune |date=7 September 2001 |archive-url=https://archive.today/20260205010804/https://www.nytimes.com/2001/09/07/IHT-bush-administration-also-abandons-effort-to-stop-software-bundling-us.html |archive-date=5 February 2026}}</ref>

On November 1, 2001, the DOJ reached an agreement with Microsoft to settle the case. The proposed settlement required Microsoft to share its [[Application Programming Interface|application programming interfaces]] with third-party companies and appoint a panel of three investigators who would have full access to Microsoft's systems, records, and source code for five years in order to ensure compliance.<ref name="MSCourtSettlement">{{cite court |litigants=United States v. Microsoft Corp. |opinion=98-CV-1232 |court=[[D.D.C.]] |date=Nov. 12, 2002 |url=https://www.justice.gov/atr/case-document/file/503541/download |access-date=2018-06-10 |archive-date=November 4, 2018 |archive-url=https://web.archive.org/web/20181104135701/https://www.justice.gov/atr/case-document/file/503541/download |url-status=live }}</ref> However, the DOJ did not require Microsoft to change any of its code nor did it prevent Microsoft from [[Tying (commerce)|tying]] other software with Windows in the future. On August 5, 2002, Microsoft announced that it would make some concessions towards the proposed final settlement ahead of the judge's decision. On November 1, 2002, Judge Kollar-Kotelly released a ruling that accepted most of the proposed DOJ settlement.<ref name=":3">{{cite court |litigants=United States v. Microsoft Corp. |vol=231 |reporter=F. Supp. 2d |opinion=144 |court=[[D.D.C.]] |date=2002 |url=https://www.leagle.com/decision/2002375231fsupp2d1441362 |access-date=2018-06-10 }}</ref> Nine states and the District of Columbia (which had been pursuing the case together with the DOJ) did not agree with the settlement, arguing that it did not go far enough to curb Microsoft's anti-competitive business practices. On June 30, 2004, the D.C. Circuit Court approved the settlement with the Justice Department, rejecting the states' claims that the sanctions were inadequate.<ref>''Massachusetts v. Microsoft Corp.'', [https://scholar.google.com/scholar_case?case=14986020318509032386&q=373+F.3d+1199&hl=en&as_sdt=6,39 373 F. 3d 1199] (D.C. Cir., 2004).</ref>

In its 2008 Annual Report, Microsoft stated:

{{blockquote|Lawsuits brought by the U.S. Department of Justice, 18 states, and the District of Columbia in two separate actions were resolved through a [[Consent Decree]] that took effect in 2001 and a Final Judgment entered in 2002. These proceedings imposed various constraints on our Windows operating system businesses. These constraints include limits on certain contracting practices, mandated disclosure of certain software program interfaces and protocols, and rights for computer manufacturers to limit the visibility of certain Windows features in new PCs. We believe we are in full compliance with these rules. However, if we fail to comply with them, additional restrictions could be imposed on us that would adversely affect our business.<ref>{{cite web|url=https://www.sec.gov/Archives/edgar/data/789019/000119312508162768/d10k.htm#tx31450_3|title=Microsoft Corporation Form 10-K Annual Report for fiscal year ending June 30, 2008 (pg. 14)|access-date=June 18, 2010|archive-url=https://web.archive.org/web/20110604163718/http://www.sec.gov/Archives/edgar/data/789019/000119312508162768/d10k.htm#tx31450_3|archive-date=June 4, 2011|url-status=dead}}</ref>}}Microsoft's obligations under the settlement, as originally drafted, expired on November 12, 2007.<ref>{{cite web |date=August 14, 2015 |title=Microsoft Consent Decree Compliance Advisory - August 1, 2003 : U.S. V. Microsoft |url=https://www.justice.gov/atr/microsoft-consent-decree-compliance-advisory-august-1-2003-us-v-microsoft |archive-url=https://web.archive.org/web/20210422051009/https://www.justice.gov/atr/microsoft-consent-decree-compliance-advisory-august-1-2003-us-v-microsoft |archive-date=April 22, 2021 |access-date=March 25, 2022 |website=United States Department of Justice}}</ref> However, Microsoft later "agreed to consent to a two-year extension of part of the Final Judgments" dealing with [[communications protocol]] licensing, and stated that if the government later wished to extend those aspects of the settlement as far as 2012, it would not object. The government made clear that the extension was intended only to give the relevant part of the settlement "the opportunity to succeed for the period of time it was intended to cover," rather than being due to any "pattern of willful and systematic violations."<ref>[https://blog.seattlepi.com/microsoft/files/library/jsr20060512.pdf ATR-SV-DIV401;MDE;15906;7](Archive at https://web.archive.org/web/20210707231429/https://blog.seattlepi.com/microsoft/files/library/jsr20060512.pdf)</ref>

==Impact and criticism==
After the 2002 settlement, industry pundit [[Robert X. Cringely]] believed a breakup was not possible, and that "now the only way Microsoft can die is by suicide."<ref>{{cite web |last1=Cringely |first1=Robert |title=The Once and Future King: Now the Only Way Microsoft Can Die is by Suicide |url=http://www.pbs.org/cringely/pulpit/2004/pulpit_20040408_000808.html |archive-url=https://web.archive.org/web/20151125143112/http://www.pbs.org/cringely/pulpit/2004/pulpit_20040408_000808.html |archive-date=2015-11-25 |website=I, Cringely}}</ref> Andrew Chin, an [[United States antitrust law|antitrust law]] professor at the [[University of North Carolina at Chapel Hill]] who assisted Judge Jackson in drafting the [[Question of law|findings of fact]] at the initial District Court trial, wrote that the settlement gave Microsoft "a special antitrust immunity to license Windows and other 'platform software' under contractual terms that destroy freedom of competition."<ref>{{cite web |last1=Chin |first1=Andrew |date=2004-09-30 |title=A case of insecure browsing |url=http://www.unclaw.com/chin/scholarship/nando.pdf |archive-url=https://web.archive.org/web/20211006045326/http://www.unclaw.com/chin/scholarship/nando.pdf |archive-date=2021-10-06 |website=newsobserver.com}}</ref><ref>{{cite web |last1=Chin |first1=Andrew |date=2005-03-21 |title=DECODING MICROSOFT: A FIRST PRINCIPLES APPROACH |url=http://www.unclaw.com/chin/scholarship/decodingmicrosoft.pdf |url-status=live |archive-url=https://web.archive.org/web/20211124025829/http://www.unclaw.com/chin/scholarship/decodingmicrosoft.pdf |archive-date=2021-11-24}}</ref> Law professor [[Eben Moglen]] noted that the way Microsoft was required to disclose its [[API]]s and protocols was useful only for “interoperating with a Windows Operating System Product”, not for implementing support of those APIs and protocols in any competing operating system.<ref>{{Cite web |author=Eben Moglen |author-link=Eben Moglen |date=January 28, 2002 |title=Free Software Matters: Shaking Up The Microsoft Settlement |url=http://moglen.law.columbia.edu/publications/lu-18.pdf |access-date=February 7, 2013 |archive-date=April 21, 2013 |archive-url=https://web.archive.org/web/20130421092749/http://moglen.law.columbia.edu/publications/lu-18.pdf |url-status=live }}</ref>

Economist [[Milton Friedman]] wrote in 1999 that the antitrust case against Microsoft set a dangerous precedent that foreshadowed increasing government regulation of an industry that had been relatively free of government intrusion, and that future technological progress in the industry will be impeded as a result.<ref>{{cite web | url=http://www.cato.org/pubs/policy_report/v21n2/friedman.html | title=The Business Community's Suicidal Impulse | last=Friedman | first=Milton | publisher=[[Cato Institute]] | work=Policy Forum | date=March–April 1999 | access-date=February 23, 2013 | archive-date=December 8, 2012 | archive-url=https://web.archive.org/web/20121208100928/http://www.cato.org/pubs/policy_report/v21n2/friedman.html | url-status=live }}</ref> After the resulting settlement, the magazine ''Business & Economic Research'' wrote that, contrary to Friedman's forecasts, the case had to that point had little effect on Microsoft's behavior. The fines, restrictions, and monitoring imposed were not enough to prevent it from "abusing its monopolistic power and too little to prevent it from dominating the software and operating system industry." For that reason, Microsoft remained dominant and monopolistic after the trial, and it continued to stifle competitors and innovative technology.<ref>{{Bluebook journal | first=Gregory T. | last=Jenkins | first2=Robert W. | last2=Bing | title=Microsoft’s Monopoly: Anti-Competitive Behavior, Predatory Tactics, And The Failure Of Governmental Will | volume=5 | journal=J. Bus. & Econ. Research | page=222 | url=https://www.researchgate.net/publication/264845425_Microsoft%27s_Monopoly_Anti-Competitive_Behavior_Predatory_Tactics_And_The_Failure_Of_Governmental_Will | year=2007}}</ref>

[[Richard Stallman]], founder of the [[Free Software Foundation]], advocating for computing freedom, provided suggestions to Ralph Nader's [[Consumer Project on Technology]] for dealing with Microsoft's behavior in March 1999. He has suggested, for instance, that Microsoft should be required to publish complete documentation of all interfaces between software components, all communications protocols, and all files. In short, the company should not release any implementations for undocumented interfaces. Stallman also noted that Microsoft should refrain from certifying any hardware as compatible with Microsoft software, unless the hardware's complete specifications have been published, so that an alternative software to support the same hardware can be implemented freely.<ref>{{Cite news |last=Jo Foley |first=Mary |date=10 March 1999 |title=Free-Software Advocate Offers Remedies for Microsoft Case |url=https://www.wsj.com/articles/SB921102995545083812 |url-status=deviated |archive-url=https://archive.today/20181026155533/https://www.wsj.com/articles/SB921102995545083812 |archive-date=26 October 2018 |access-date=1 June 2024 |work=[[The Wall Street Journal]]}}</ref>

Chris Butts, writing in the ''Northwestern Journal of Technology and Intellectual Property'', argued that the U.S. government recognized the benefits of including a web browser with an operating system. At the appellate level, the government dropped the claim of [[Tying (commerce)|tying]] given that—as laid out in Section 1 of the Sherman Act—it would have had to prove that more harm than good resulted from the type of tying carried out by Microsoft.<ref>Butts, Chris 2010 https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1105&context=njtip {{Webarchive|url=https://web.archive.org/web/20220119203813/https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1105&context=njtip |date=January 19, 2022 }}</ref><ref>{{Cite web|url=https://www.law.cornell.edu/wex/sherman_antitrust_act|title=Sherman Antitrust Act|access-date=April 27, 2021|archive-date=May 2, 2021|archive-url=https://web.archive.org/web/20210502214401/https://www.law.cornell.edu/wex/sherman_antitrust_act|url-status=live}}</ref>

==See also==
{{Slist tying}}
*''[[Antitrust (film)|Antitrust]]'', a 2001 film about "NURV", a large software company that represents a fictionalized Microsoft
* [[Big Tech]]
* [[Browser wars]]
* [[Criticism of Microsoft]]
* [[Microsoft litigation]]
* ''[[Microshaft Winblows 98]]'', a 1998 video game parodying the [[Windows 98]] interface that featured numerous allusions to ''United States v. Microsoft Corp.''
* [[Removal of Internet Explorer]]

==References==
{{Reflist}}
* {{cite book | first1 = Phillip E. | last1 = Areeda | first2 = Herbert | last2 = Hovenkamp | title = Antitrust Law: An Analysis of Antitrust Principles and Their Application | edition = 4th | year = 2015 | location = New York | publisher = Wolters Kluwer | isbn = 978-0-7355-6428-2 }}

==Further reading==
{{refbegin}}

===Articles===
* Andrew Chin, [http://www.unclaw.com/chin/scholarship/microsoft.htm Decoding Microsoft: A First Principles Approach] {{Webarchive|url=https://web.archive.org/web/20110609183736/http://www.unclaw.com/chin/scholarship/microsoft.htm |date=June 9, 2011 }}, 40 Wake Forest Law Review 1 (2005)
* Kenneth Elzinga, David Evans, and Albert Nichols, United States v. Microsoft: Remedy or Malady? 9 Geo. Mason L. Rev. 633 (2001)
* John Lopatka and William Page, Antitrust on Internet Time: Microsoft and the Law and Economics of Exclusion, 7 Supreme Court Economic Review 157–231 (1999)
* John Lopatka and William Page, The Dubious Search For Integration in the Microsoft Trial, 31 Conn. L. Rev. 1251 (1999)
* John Lopatka and William Page, Who Suffered Antitrust Injury in the Microsoft Case?, 69 George Washington Law Review 829-59 (2001)
* Alan Meese, Monopoly Bundling In Cyberspace: How Many Products Does Microsoft Sell ? 44 Antitrust Bulletin 65 (1999)
* Alan Meese, Don't Disintegrate Microsoft (Yet), 9 Geo. Mason L. Rev. 761 (2001)
* Steven Salop and R. Craig Romaine, Preserving Monopoly: Economic Analysis, Legal Standards, and the Microsoft Case, 7 Geo. Mas. L. Rev. 617 (1999)
* Howard A. Shelanski and [[J. Gregory Sidak]], Antitrust Divestiture in Network Industries, 68 University of Chicago Law Review 1 (2001)

===Books===
* {{cite book |author-last=Abramson |author-first=Bruce |title=Digital Phoenix; Why the Information Economy Collapsed and How it Will Rise Again |year=2005 |publisher=[[MIT Press]] |isbn=978-0-262-51196-4}}
* {{cite book |title=The Microsoft Antitrust Cases - Competition Policy for the Twenty-first Century |author-first1=Andrew I. |author-last1=Gavil |author-first2=Harry |author-last2=First |publisher=[[MIT Press]] |location=Cambridge, Massachusetts, USA |date=2014-12-09 |isbn=978-0-262-02776-2}}
* {{cite book |author-last1=Liebowitz |author-first1=S. J. |author-last2=Margolis |author-first2=Stephen |title=Winners, losers & Microsoft: competition and antitrust in high technology |url=https://books.google.com/books?id=-2C5AAAAIAAJ |access-date=2010-11-29 |date=2001-03-01 |publisher=[[Independent Institute]] |isbn=978-0-945999-84-3 |archive-date=March 20, 2015 |archive-url=https://web.archive.org/web/20150320043358/http://books.google.com/books?id=-2C5AAAAIAAJ |url-status=live |df=mdy-all }}
* {{cite book |author-last1=Page |author-first1=William H. |author-first2=John E. |author-last2=Lopatka |title=The Microsoft Case: Antitrust, High Technology, and Consumer Welfare |publisher=University of Chicago Press |year=2009 |isbn= 978-0-226-64464-6}}
* {{cite book |author-first=Alan |author-last=Reynolds |title=The Microsoft Antitrust Appeal |publisher=Hudson Institute |date=2001}}
{{refend}}

==External links==
* [http://www.usdoj.gov/atr/cases/f200400/200457.htm Final Judgment in ''U.S. v. Microsoft''] (injunction including final settlement terms approved by the court) (note that the copy posted on the district court's web site is actually an earlier version that the court declined to approve).
* [http://www.usdoj.gov/atr/cases/ms_index.htm The United States DOJ's website on U.S. v. Microsoft]
* [https://www.microsoft.com/Presspass/legal_newsroomarchive.mspx?case=Government%20Anti-Trust%20Case Microsoft's Antitrust Case, Microsoft News Center]
* [https://www.wired.com/news/antitrust/0,1551,35212,00.html Wired news timeline of the Microsoft antitrust case]
* [https://web.archive.org/web/20020808104706/http://zdnet.com.com/2100-1104-917931.html ZDnet story on 4th anniversary of Microsoft antitrust case]
* [https://web.archive.org/web/20021012081934/http://zdnet.com.com/2100-1104-948381.html ZDnet story on proposed concessions]
* [http://www.netlitigation.com/netlitigation/antitrust.htm Antitrust & the Internet: Microsoft case archive]
* [http://www.unclaw.com/chin/scholarship/microsoft.htm "A Case of Insecure Browsing" by Andrew Chin. ''Raleigh News & Observer'', September 30, 2004]
* {{usurped|1=[https://web.archive.org/web/20100505113128/http://www.groklaw.net/staticpages/index.php?page=GatesDepo Bill Gates deposition video at Microsoft on August 27, 1998]}} (Windows Media, Ogg Theora and Ogg Vorbis formats)
* [http://www.capitalismcenter.org/Advocacy/Antitrust/Microsoft/ The Center for the Advancement of Capitalism] {{Webarchive|url=https://web.archive.org/web/20130731202802/http://www.capitalismcenter.org/Advocacy/Antitrust/Microsoft/ |date=July 31, 2013 }}
* [https://web.archive.org/web/19980110230150/http://upside.com/texis/mvm/story?id=349ef3fa0 Nader 0, Microsoft 0 at Upside Magazine of December 31, 1997]
* [https://archive.org/stream/10Kahle000190#page/n77/mode/2up An Interview with Marc Andreessen about Microsoft antitrust litigation and browser wars] <!-- Here's a citation for when this source is incorporated into the article someday.<ref name="Upside March 1998">{{cite magazine | magazine=[[Upside (magazine)|Upside]] | date=March 1998 | url=https://archive.org/stream/10Kahle000190 | access-date=February 6, 2015}}</ref>{{rp|76}} -->
*{{cite web |title=How Microsoft Internet Explorer Almost Became The Default Web Browser |date=September 6, 2019 |work=[[CNBC]] |url=https://www.youtube.com/watch?v=e33Go6gbL7s |archive-url=https://ghostarchive.org/varchive/youtube/20211211/e33Go6gbL7s| archive-date=2021-12-11 |url-status=live|via=[[YouTube]] }}{{cbignore}}

{{United States antitrust law|state=collapsed}}
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{{DEFAULTSORT:United States V. Microsoft}}
[[Category:United States Court of Appeals for the District of Columbia Circuit cases]]
[[Category:United States computer case law]]
[[Category:Microsoft criticisms and controversies]]
[[Category:United States antitrust case law]]
[[Category:Microsoft litigation]]
[[Category:2001 in United States case law]]