What the Microsoft Ruling Means to Consumers

It could be years before consumers see any impact of the landmark Microsoft Corp. ruling handed down Monday.

Another phase in the antitrust case, in which possible punishments will be explored, along with expected appeals of the verdict could tie the case up for several more years.

Here, in question and answer form, is a look at what the decision means for Americans and what they can expect to see next:

Question: My computer uses Microsoft Windows. How will this trial affect me?

Answer: The verdict is unlikely to affect Microsoft customers immediately, since there’s no product recall being considered. But the judge could eventually order Microsoft to change the way it designs Windows, such as requiring it to offer a version without an Internet browser or requiring it to include rival software programs within Windows.

In the most extreme case, the judge could break up Microsoft into smaller companies and set them to compete against one another by selling different versions of Windows. Almost any punishment is likely to be deferred until the case completes its journey through the federal appeals courts, which could last until 2002.

Judge Thomas Penfield Jackson did contend that Microsoft’s practices cannot be explained “as an attempt to benefit consumers” but were rather an effort to “quash innovation that threatened its monopoly position.”

Microsoft Chairman Bill Gates said the company will focus its efforts on delivering new innovation to consumers.

Q: How did the judge issue his ruling?

A: The judge decided on a very unusual process. First, he issued his “factual findings” on Nov. 5, in which he made the crucial determination that Microsoft is a monopoly. On Monday, the judge ruled that Microsoft violated the Sherman Antitrust Act. The judge found that the company used its position to “monopolize the Web browser market” to the detriment of competitors and that the software giant could also be liable under state anti-competition laws.

Q: What specific sections of law did the judge cite in handing down his verdict?

A: The judge ruled that Microsoft violated Sections 1 and 2 of the Sherman Antitrust Act in addition to various state antitrust laws. Section 1 of the Sherman Act prohibits contracts and combinations in restraint of trade. Section 2 makes it unlawful for a person or firm to attain or preserve monopoly power through anti-competitive acts.

The judge found that Microsoft violated the first section of the 1890 law by tying Microsoft’s Internet Explorer Web browser to its Windows operating system. It violated the second section because the company “maintained its monopoly power by anti-competitive means and attempted to monopolize the Web browser market,” the judge found.

Q: What happens next?

A: The judge will set a schedule for the next phase of the case to consider possible punishments of Microsoft.

The company has promised to appeal the ruling and believes it has a strong case in higher courts.

“Until the appeal is over, nothing is settled. We’ve learned that from experience,” said Microsoft Chief Executive Steve Ballmer. That process could tie up the case for several years in appeals courts.

Q: What about future settlement talks?

A: Government lawyers said any settlement would have to reflect the determination of law made by the judge.

“The department is always prepared to settle so long as the remedy will deal with the legal violations that have been fully established by the court,” said Joel I. Klein, the Justice Department’s antitrust chief.

Citing previous attempts to resolve the case through mediated negotiations, Gates said he believes there were parties who were not interested in settling, resulting in the eventual collapse of those talks.

“We remain open-minded to that, but we’ll have to see what develops,” Gates said in a CNBC interview.

Q: Where can I read the judge’s decision?

A: The judge’s decision has been posted on a Web site run by the Government Printing Office, at https://usvms.gpo.gov.