Judge calls Microsoft a monopoly; what next?

Microsoft Chairman and CEO Bill Gates

ALSO • Full report: U.S. v Microsoft, Findings of Fact

VIDEO CNN's Rick Lockridge reports: On the implications of the ruling that Microsoft is considered a monopoly Windows Media 28K 80K A look at the history of the Microsoft antitrust trial Windows Media 28K 80K

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(CNN) -- Microsoft's dominance of the computer operating system market was jolted in November when U.S. District Judge Thomas Penfield Jackson agreed with prosecutors that the company is a monopoly.

"Through its conduct Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," the judge said in his 207-page findings of fact.

Addressing a key issue of the case that has been at trial in Washington since October 1998, the judge found that Microsoft's decision to bundle its Internet browser with its Windows operating system kept other Internet browsers from competing on an equal footing. "Web browsers and operating systems are separate products," Jackson said.

Gates downplayed the significance of the ruling and even joked about it at the Comdex convention in Las Vegas nine days later. "Has anybody here heard any good lawyer jokes recently?" he asked at his keynote speech.

Although not a verdict, Jackson's findings prompted speculation that Microsoft might be forced to change the way it does business, particularly in licensing Windows to computer makers. It might also be forced to publish its Windows source code, or even be broken into smaller companies.

The worry for consumers as the new year begins is that Jackson's ruling may ultimately make personal computing even more chaotic than it is, a scenario Gates has often suggested in his arguments.

One issue at trial claimed that Windows 98, which was sold integrated with Microsoft's Web browser Internet Explorer, prevented consumers from choosing their own browsers

In an interview with TIME magazine, Gates said he is opposed to any deal that might hamper Microsoft's ability to innovate and prevent inconsistencies.

"If we can't add functionality to Windows, there is no Windows!" Gates said.

Microsoft still has the possibility of an appeal. "Findings of fact are not bulletproof," said William Neukom, the company's general counsel.

William Kovacic, a professor at the George Washington University law school, has doubts over whether Microsoft can win on appeal.

"Judge Jackson has poured a lot of concrete here," he said.

Meanwhile, Jackson's findings sparked a class-action lawsuit in California in late November alleging Microsoft overcharged consumers for Windows. At least seven other lawsuits were filed against Microsoft in Alabama, Louisiana and New York in the aftermath of Jackson's pronouncement.

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