The Microsoft Antitrust Case

38 Pages Posted: 11 Dec 2000

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

Date Written: April 2, 2001

Abstract

This paper analyzes the law and economics of United States v. Microsoft, a landmark case of antitrust intervention in network industries. The United States Department of Justice and 19 States sued Microsoft alleging (i) that it monopolized the market for operating systems of personal computers and took anti-competitive actions to illegally maintain its monopoly; (ii) that it attempted to monopolize the market for Internet browsers because such browsers would create competition for operating systems; (iii) that it bundled its browser (Internet Explorer) with Windows; and that it engaged in a number of other anti-competitive exclusionary arrangements with computer manufacturers, Internet service providers, and content providers attempting to thwart the distribution of Netscape's browser. The District Court Judge found in most points for the plaintiffs and ordered the breakup of Microsoft into two companies, one with all the operating systems software, and one with all other products of the company. The District Court also imposed a number of severe restrictions on the business conduct of Microsoft. We analyze the economic issues related to liability. We also analyze the applicability and effectiveness of the remedies imposed by the District Court and contrast them with other potential remedies.

Keywords: Antitrust, Microsoft, networks, network externalities

JEL Classification: L1, D4

Suggested Citation

Economides, Nicholas, The Microsoft Antitrust Case (April 2, 2001). NYU Ctr for Law and Business Research Paper No. 01-003, Available at SSRN: https://ssrn.com/abstract=253083 or http://dx.doi.org/10.2139/ssrn.253083

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