The Antitrust Cases Against Microsoft (1990 - 2001) and Arguments for the Legitimacy of Microsoft's Conduct

The first antitrust case against Microsoft took place from 1990 to 1992. During that time, the Federal Trade Commission (FTC) examined whether Microsoft was engaging in the foreclosure of the software market. The suit against Microsoft was brought by IBM, which complained that Microsoft's dominance of the operating systems prevented IBM's allegedly superior OS 2 operating system from gaining a foothold. The FTC failed to find any evidence of this foreclosure, however, and dropped the case. Microsoft was not found guilty of engaging in any unfair market practices; rather, the market was simply characterized by extremely strong competition.

After the FTC dropped the first Microsoft antitrust case, an unprecedented event took place. Historically, the FTC and the Department of Justice (DOJ) held to an agreement whereby each agency was given oversight over a particular group of industries to the exclusion of the other. But in 1993, after Bill Clinton assumed the Presidency, the Department of Justice took over the case from the FTC - under the leadership of Anne Bingaman, the Clinton administration's chief antitrust enforcer. The DOJ officials recognized that the high-tech industry would have a tremendous impact on the future and thereby decided to assume enforcement of antitrust policy over that industry. The DOJ obtained all of the Microsoft case documents from the FTC and pursued the case for several more years.

In 1994, the FTC charged Microsoft with several antitrust violations, which were resolved via a consent decree whereby Microsoft agreed to end certain questionable practices. For instance, Microsoft would not longer charge computer manufacturers fees per processor sold and per computer shipped - even if the computer in question had no Microsoft software on it. Instead, the Department of Justice mandated that Microsoft only charge for computers that had Windows on it. Furthermore, Microsoft was to cease requiring computer manufacturers to sign certain exclusionary agreements.