Question

Department of Justice is able to sue a firm for alleged antitrust misbehavior in the U.S.? How did it get to Microsoft and built the case against it?

Answer 1

A successful antitrust suit by the U.S. government often brings a swarm of private plaintiffs. Microsoft appears an obvious target for this strategy as it has been the target of repeated antitrust lawsuits. In January of 2002, on the heels of Microsoft‘s antitrust settlement with the Justice Department and several states, AOL (through its subsidiary Netscape Communications) filed a private antitrust suit against Microsoft. The suit cited seven counts since 1995 in which Microsoft committed illegal acts and requested punitive damages as well as injunctive relief. AOL‘s strategy of using antitrust litigation to extract a hefty settlement from its leading rival was well rewarded. Just sixteen months after the suit was filed, Microsoft not only agreed to settle the case, but to pay AOL $750 million in the process (Carney, 2003).

Subsequent to this result, other firms have been encouraged to adopt a similar strategy. Sun Microsystems has filed a private antitrust suit against Microsoft seeking damages of over $1 billion, an amount which could be tripled under federal law (Gonsalves, 2002), while Be Incorporated filed suit alleging that Microsoft was responsible for destroying its business (Mook, 2002). Microsoft subsequently agreed to settle with Be for $23 million in addition to legal fees (Lawson, 2003). In December of 2003, RealNetworks also filed a $1 billion antitrust suit against Microsoft (Peterson & Dudley, 2003), using wording which closely followed that used by Netscape in its 2002 lawsuit.

Microsoft's misdeeds in the browser fight are well known; they formed the basis of a federal court's decision, in 2000, that the company was a monopoly and had violated antitrust laws. And now it looks as though that misbehavior will form the basis of Burst.com's case. On Oct. 24 in Baltimore, U.S. District Judge Frederick Motz, who is overseeing the preliminary motions in Burst's case, ruled that to prove its case against Microsoft, Burst can use some of the "findings of fact" handed down by the court in the antitrust suit.

Microsoft says that Motz's ruling, which didn't indicate how many of the 412 findings Burst can use, doesn't significantly hurt its chances in the suit. What's clear, though, is this: All the while Microsoft was fighting, in court and in the media, a charge that it was an unfair monopolist, it was throwing its weight around the world of digital media. Microsoft had to make sure, Lang says, that a small firm like Burst couldn't stand in the way of Microsoft's efforts to integrate media delivery into its operating system.