Microsoft: US Conflicts

On May 18th 1998 Microsoft faced a public court case against the United States Department of Justice (DOJ) and 20 other US states. Microsoft were subjected to two accusations:

1. Microsoft was accused of abusing their monopoly in operating system and web browser sales. Microsoft’s combination of Windows and Internet Explorer software came under scrutiny as its legality was questioned.

2. Microsoft was also accused of restricting web browser competitors. Microsoft was suspected of changing its Application Programming Interfaces (APIs) to suit Internet Explorer and to the detriment of competitors.

In October 1998 Microsoft were sued by the Justice Department for threatening PC manufacturers with revoking their licence to distribute Windows if they removed the Internet Explorer icon from the initial desktop, a request made by its competitors Netscape.

Microsoft lost their cases as Judge Jackson concluded that Microsoft were guilty of holding a monopoly over personal computer operating systems and had taken illegal actions to prevent competitors from realistically competing in the market. However, Microsoft launched an appeal, and in September 2000 the Federal Appeals Court overturned Judge Jackson’s ruling due to the fact that he had given off the record interviews to the media during the trial and they believed him to have allowed his personal opinions to interfere with his decision. Despite this the court upheld Jackson monopolization ruling and remanded the case for ‘consideration of a proper remedy.’ In September 2001 under George Bush’s government the Department of Justice decided that they were no longer demanding Microsoft separate their products and were deciding on a lesser antitrust punishment. The final settlement came in November 2001 requiring Microsoft to make public its application programming interfaces with competitors and employ three people who would have full access to Microsoft systems, records and source codes for five years. There was no restriction on Microsoft combining other software with Windows again. Despite the objections of nine of the prosecuting states the US Appeals Court approved the settlement in 2004.

Wired magazine has quoted Bill gates as saying "Of course I have as much power as the president has" ^[1] Microsft undertook a public defence. The Independent Institute who are funded by Microsft put a full page advert in the Washinton Post and the New York Times on June 2nd 1999. The publication was a"An open letter to president Clinton From 240 Economists On Anti Trust Protectionism:

"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...Increasinly, however, some firms have sought to handicap their rival' races by turnign to governemnt for protection...Many of these cases are based on speculation about some vague specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S firms and inpede their competitiveness abroad."

During this trial Microsoft became very involved in politics. In 1995 Microsoft had one person working in Washington, which grew to ten in 1999. Microsoft increased their presidential campaign contributions and lobbying budget greatly. In 1994 Microsoft donated $106,000 to presidential election campaigns, in 1996 this figure rose to $232,000 and in 1998 it had reached $1 million. Their lobbying budget almost doubled between 1997 and 1998 to $3.74 million. Lobbying efforts were focused on the Anti Trust case as they lobbied against the budget increase for the Justice Departments Anti Trust department. This was criticised fiercely as the Washington Post wrote:

“The effort by Microsoft to get the proposed budget of the Justice Departments Anti Trust division slashed fits a comical caricature of the thuggish company that Microsoft enemies believe the software giant to be “

In relation to the Anti trust campaign Microsoft most interesting financial contributions have been their contributions to Members of the Judiciary Committees in the Senate and the House of Representatives, the people that would have the greatest influence over the Justice Department.

Microsoft are also involved with The Association for Competitive Technology and The Americans for Technology Leadership The latter were accused of sending letters, from two dead, people to Mark Shurtless, the Utah Attorney General, asking for lenient treatment to Microsoft for their monopoly conduct. This is reportedly part of Microsoft's strategy to influence Congress ^[2]

Microsoft has also lobbied for tax relief, stronger intellectual property protection and a greater number of visas for foreign high tech workers. It is speculated that as well as attempting to influence the Anti Trust case in their favour Microsoft have been anxious to get a greater influence in the White House to counter the increased lobbying efforts of their competitors. Sun Microsystems, Netscape and Oracle formed a group called The Project to Promote Competition and Innovation in the Digital Age or ProComp. ProComp’s strategic advisor and former presidential candidate Bob Dole tried to convince the Justice Department to pursue Microsoft further on the Anti Trust case.

Notes

1. ^
2. ^ Corporate Watch (2004) Microsoft: A Corporate ProfileCorporate Watch(accessed 05/04/07)