United States v. Microsoft Corporation Case Brief Summary | Law Case Explained

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United States v. Microsoft Corporation | 253 F.3d 34 (2001)

Under section one the Sherman Act, a tying arrangement, or agreement where a seller conditions the sale of a product on the inclusion of another product, is per se illegal if the seller has significant market power and the arrangement strongly hinders free competition. However, if the seller doesn’t have significant market power or the arrangement doesn’t strongly hinder free competition, the arrangement is subject to a rule-of-reason analysis, where a court balances the procompetitive justifications of the agreement against its anticompetitive effects. In United States versus Microsoft Corporation, the U.S. Court of Appeals for the District of Columbia considered whether a tying agreement involving software-platform products was per se illegal.

Microsoft Corporation is a leading seller of computer software. In the 1990s, Microsoft began a sales practice where it bundled its web-browsing software, Internet Explorer, with its operating-system software, Windows 95 or 98. At the time, Microsoft had market power when it came to operating software but faced competition in the market for web-browsing software.

Subsequently, the United States brought a complaint against Microsoft in federal district court, arguing, in part, that Microsoft’s bundling practices were an unlawful restraint on trade under the Sherman Act. The district court determined that the bundling practices constituted a per se violation and issued a final judgment restricting Microsoft’s conduct.

Immediately afterward, secret interviews that the trial judge gave to reporters prior to entering judgment appeared in the press. In the interviews, the judge expressed his impression of the testimony offered at trial. Additionally, the judge likened Microsoft’s conduct to drug traffickers and told reports that he didn’t have to give Microsoft due process.

Microsoft appealed to the United States Court of Appeals for the District of Columbia Circuit.
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