By Rajiv Chandrasekaran
Following is a list of frequently asked questions regarding the antitrust suit against Microsoft.
Q. Why are the U.S. government and 20 state attorneys general taking Microsoft to court?
A. The Justice Department and the states believe that Microsoft has used its monopoly in operating system software to protect its dominance and eliminate competitors. The government says that in the long run, consumers will be harmed, because there will be less competition and fewer choices.
More specifically, the government contends that Microsoft has engaged in actions to preserve its Windows monopoly that violate antitrust laws. The government also maintains that the company has used the power of its Windows monopoly to attempt to monopolize the market for Internet browsing software. In addition, government lawyers allege that the company has committed other anti-competitive acts.
Microsoft contends that it is simply trying to innovate its products. The company contends that its actions are legal and says that there's no groundswell of consumer indignation over the practices that the government is targeting.
Q. What law does the government allege Microsoft is violating?
A. The Justice Department and the states contend that Microsoft is violating the Sherman Antitrust Act, which was passed by Congress in 1890. The act has two sections. The first section prohibits certain types of agreements that restrict the flow of trade. The second section prohibits the misuse of monopoly power, namely anti-competitive actions that seek to maintain that monopoly power and actions that attempt to use that monopoly power to dominate another market.
The government, for example, contends that some of Microsoft's business agreements with Internet service providers and Internet content providers, which restrict their ability to promote non-Microsoft browsers, violate Section 1 of the Sherman Act. The government also alleges that Microsoft has violated Section 2 by engaging in anti-competitive actions to preserve its Windows monopoly and to extend that monopoly into the browser market.
Q. What could happen if the government wins the case?
A. No matter who wins, the case almost certainly will be appealed, probably all the way to the Supreme Court. If the government wins at the trial court, it has already specified that it wants Microsoft to cancel contracts deemed exclusionary. In addition, the government wants Microsoft either to strip out its Internet browsing technology from Windows 98 or to include a rival browser made by Netscape Communications Corp. The government also indicated in October that, should it win, it would seek an additional hearing where it would suggest additional sanctions that should be placed on Microsoft. Ultimately, though, it is up to the judge to decide what penalties to levy upon Microsoft should he rule in the government's favor.
Practically speaking, if Microsoft loses, industry analysts expect the company to place Netscape's software in Windows 98 because removing Microsoft's Internet Explorer software would be extremely difficult. It is impossible, however, to determine the consumer impact of other "remedies" the government may suggest.
It's difficult to speculate on the company's possible stock performance should they lose the case. Microsoft's stock price dipped during the recent market turmoil, but has stayed relatively level throughout the investigation.
Negative publicity hurts, and could erode sales or make it harder for the company to do business deals with partners. Some industry analysts also fear that Microsoft management could get so distracted by the lawsuit that they might make poor business decisions.
Q. What will happen if Microsoft wins?
A. For one, Microsoft's Windows 98 software would not be affected. But even if Microsoft wins, it still may not spell the end of the company's legal fight with the government. The Justice Department continues to investigate some of the company's other business practices and products, including Windows NT, its operating system for corporate networks, sources familiar with the matter have said.
Q. How long has the government been investigating Microsoft?
A. The government has been looking into Microsoft since 1990, when the Federal Trade Commission first started examining charges of monopolistic behavior. In 1995, Microsoft and the Justice Department reached a settlement that required the company to change a variety of business practices, including key aspects of its licensing agreements with personal computer makers.
Q. Why did the Justice Department decided to file suit this spring, when Microsoft has dominated the industry for years with its Office products, such as Word and Excel?
A. The government believes Microsoft's efforts to monopolize the market for Internet browsers could have an wide-ranging impact in the networked world. If most people accessed the Internet with Microsoft software, some critics of the company suggest that it could control commerce and content on the global computer network. The stakes, they contend, are much higher now than they were in the markets for word processing or spreadsheet software.
© Copyright 1998 The Washington Post Company