The 21-year antitrust battle Microsoft Corp. (MSFT) has been fighting with the U.S. government ends today, May 12.

In 1994, the U.S. Department of Justice sued Microsoft alleging that the world's most dominant software company used unfair contracts that choked off competition and preserved its monopoly position. Microsoft, which already had its MS-DOS and Windows operating systems used in more than 120 million personal computers as of 1994, was accused of building a barricade of exclusionary and unreasonably restrictive licensing agreements to deny others an opportunity to develop and market competing products. A six-and-a-half year settlement inked by the DOJ and the European Commission with Microsoft, among others, allowed developers to work with competitors after some time and to barred the software maker from executing its anti-competitive "per processor" licenses.

In 1998, the Justice Department filed a civil contempt action against Microsoft for allegedly violating one of the decree's provisions. The lawsuit claimed that Microsoft had maintained a monopoly in the market by bundling to separate products, the operating system Windows and the Web browser Internet Explorer.The DOJ said that Microsoft's decision to integrate its own browser into the operating system -- in effect, giving it away for free -- crippled competitors, including Netscape.

In April 3, 2000, a judgment was handed down in the case, calling the company an "abusive monopoly". The District Court issued a final judgment requiring Microsoft to submit a proposed plan of divestiture, with the company to be split into an operating systems business and an applications business. The Court of Appeals upheld the District Court's conclusion.

In 2004, Microsoft settled with the Department of Justice. Under the settlement, Microsoft was required to disclose to other software developers the interfaces used by Microsoft's middleware to interoperate with the operating system, enabling other software developers to create competing products that emulate Microsoft's integrated functions. Microsoft was also required to disclose the protocols that are necessary for software located in a server computer to inter-operate with Windows on a PC.
In March 2004 the European Union brought antitrust legal action against Microsoft, citing it abused its dominance with the Windows, resulting in a judgment of EUR497 million.

At present, Microsoft already has faced stiff competition in the software market. In the search engine market, its Bing trails Google Inc.'s Google and Yahoo!. In the Web browser market, Microsoft's Internet Explorer has stiff competition from Google's Chrome, Mozilla's Firefox and Apple's Safari. Apple's iTunes has also defeated Windows' Media Player for handling multi-media content. As for operating systems, Dell and Lenovo and other computer makers sell computers systems pre-loaded with opensource operating system like Linux rather than Windows.

In its statement yesterday, the Department of Justice said that as a result of its antitrust division's efforts in the Microsoft case and final judgment, the competitive landscape changed allowing the marketplace to operate in a fair and open manner bringing about increased innovation and more choices for consumers. The final judgment also prevented Microsoft from continuing to engage in exclusionary behavior that was harmful to American businesses and consumers.

"The Microsoft final judgment, which has been in effect since 2002, was designed to eliminate Microsoft's illegal practices, to prevent recurrence of the same or similar practices and to restore the potential for competition from software products known as "middleware." To that end, the judgment protected the development and distribution of middleware -- including web browsers, media players and instant messaging software -- thereby increasing choices available to consumers," according to the DOJ.

"The final judgment proved effective in protecting the development and distribution of middleware products and prevented Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit. Microsoft no longer dominates the computer industry as it did when the complaint was filed in 1998. Nearly every desktop middleware market, from web browsers to media players to instant messaging software, is more competitive today than it was when the final judgment was entered. In addition, the final judgment helped create competitive conditions that enabled new kinds of products, such as cloud computing services and mobile devices, to develop as potential platform threats to the Windows desktop operating system.

"Since the entry of the final judgment, there have been a number of developments in the competitive landscape relating to middleware and to personal computer (PC) operating systems generally that suggest that the final judgment accomplished its goal of fostering competitive conditions among middleware products, unimpeded by anticompetitive exclusionary obstacles erected by Microsoft.

"The Microsoft final judgment was unique in creating a technical committee empowered to assist the department, the U.S. District Court for the District of Columbia and a group of states involved in the case. Given the technical nature of Microsoft's obligations under the final judgment, the technical committee members and their staff proved invaluable to the enforcement of the final judgment."

Lawsuit Against Microsoft in 1998

In 1998, the department and attorneys general for 19 states plus the District of Columbia, filed suit against Microsoft alleging violation of the antitrust laws. The core allegation in the original lawsuit, upheld by the U.S. Court of Appeals in June 2001, was that Microsoft had unlawfully maintained its monopoly in PC operating systems by excluding competing middleware that posed a nascent threat to the Windows operating system. Specifically, the court of appeals upheld the district court's conclusion that Microsoft engaged in unlawful exclusionary conduct by using contractual provisions to prohibit computer manufacturers from supporting competing middleware products on Microsoft's operating system, prohibiting consumers and computer manufacturers from removing access to Microsoft's middleware products in the operating system, and reaching agreements with software developers and third parties to exclude or impede competing middleware products.

The Department of Justice worked extensively with two groups of plaintiff states (the New York Group and the California Group) with similar final judgments in this matter. The level and depth of cooperation between the department and the states is a model for federal-state civil law enforcement.

Certain provisions in the Microsoft final judgment expired in November 2007. Other provisions relating to Microsoft's obligation to make certain interoperability information available to third parties have twice been extended with Microsoft's consent. As these issues have now been resolved, it is appropriate for the final judgment to expire, the DOJ said.