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Antitrust Keyed to Sullivan, 8th Ed.
United States v. Microsoft Corp.
Citation:
147 F.3d 935 (1998)Facts
Microsoft Corporation held dominant market position in operating systems due to its installed base on IBM and compatible personal computers, benefiting from increasing returns to scale and network externalities in the software industry. In 1994, the Department of Justice filed antitrust suit against Microsoft alleging anticompetitive licensing practices with OEMs. The parties entered a consent decree including Section IV(E)(i) prohibiting Microsoft from entering license agreements conditioned on licensing any “other product” but containing proviso that this “shall not be construed to prohibit Microsoft from developing integrated products.” Microsoft developed successive versions of Internet Explorer browser, initially released with Windows 95 in July 1995. Microsoft’s license agreements required OEMs to accept and install the complete Windows 95 package including Internet Explorer and prohibited removing features or functionality. The first three IE versions were included on Windows 95 master disk; IE 4.0 was initially distributed on separate CD-ROM. When Microsoft planned to require OEM preinstallation of IE 4.0 in February 1998, the Department filed contempt petition. The district court found the consent decree ambiguous, denied contempt, but entered preliminary injunction without providing Microsoft notice of preliminary injunction standards and appointed special master to propose findings and conclusions.
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