United States v. Microsoft Corp.
Citation: 253 F.3d 34 (D.C. Cir. 2001)
Facts
The Department of Justice and twenty state attorneys general sued Microsoft, alleging that it had unlawfully maintained its monopoly in PC operating systems and attempted to monopolize the web browser market in violation of Sherman Act § 2. The government alleged that Microsoft used its Windows monopoly to crush Netscape Navigator (then the dominant browser) and Sun’s Java platform because these products, if successful, could have become alternative platforms that reduced the significance of Windows. Microsoft’s conduct included exclusionary OEM licensing restrictions, tying Internet Explorer to Windows, and predatory browser distribution deals.
Issue
Whether Microsoft’s conduct — including exclusionary OEM licensing, tying IE to Windows, and foreclosing Netscape’s distribution channels — constituted unlawful monopolization under Sherman Act § 2.
Holding
The D.C. Circuit affirmed liability for unlawful maintenance of the Windows monopoly through exclusionary conduct but reversed the attempted monopolization charge in the browser market and vacated the district court’s breakup remedy. It remanded for a new remedy proceeding.
Rule
Under § 2, a monopolist engages in unlawful exclusionary conduct when: (1) the conduct has significant anticompetitive effects, and (2) those effects are not justified by procompetitive efficiencies. Microsoft established that the causation requirement for § 2 is relaxed — a plaintiff need not prove that the monopolist’s conduct was the but-for cause of harm if the conduct contributed to the maintenance of monopoly power. For tying claims, a per se rule does not automatically apply to software integration; rule of reason analysis is required.
Significance
Microsoft is the most important modern monopolization case and is required reading in any antitrust course. It comprehensively addresses the standards for exclusionary conduct under § 2, the application of antitrust to technology markets, the “browser wars” as a case study in platform competition and network effects, and the difficulties of antitrust remedies in dynamic technology industries. The case is also notable for introducing a modified burden-shifting framework for § 2 exclusionary conduct claims.