The U.S. Department of Justice and 20 states sued Microsoft on May 18, 1998, alleging that the company used its dominance in Intel-compatible PC operating systems to suppress Netscape Navigator, Java, and other competing technologies. Prosecutors challenged Microsoft’s bundling of Internet Explorer with Windows, restrictive licensing terms imposed on computer manufacturers, and technical practices that made it difficult to remove IE or give rival browsers equal prominence. Witness Steven McGeady testified that Microsoft executive Paul Maritz described a strategy to “extinguish” and “smother” Netscape by distributing a competing browser for free. Evidence also showed that Microsoft submitted inaccurate videotapes depicting the ease of removing IE and installing Netscape; executives Jim Allchin and Brad Chase acknowledged problems with the demonstrations.
On November 5, 1999, Judge Thomas Penfield Jackson found that Microsoft held a monopoly in x86 PC operating systems and had acted to crush threats from Netscape, Apple, Java, Lotus, RealNetworks, and Linux. On April 3, 2000, he ruled that Microsoft had unlawfully monopolized, attempted to monopolize, and tied products in violation of the Sherman Act, ordering a breakup on June 7. The D.C. Circuit overturned the breakup and narrowed the liability analysis on June 28, 2001, while leaving key factual findings intact. A settlement approved on November 1, 2002, and affirmed on June 30, 2004, required API and protocol disclosures, limits on contracting practices, and five years of compliance monitoring; parts of the judgment were later extended through 2012.
