CONCLUSIONS OF LAW
The United States, nineteen individual states, and the District ofColumbia ("the plaintiffs") bring these consolidated civilenforcement actions against defendant Microsoft Corporation("Microsoft") under the Sherman Antitrust Act, 15 U.S.C. § 1 and2. The plaintiffs charge, in essence, that Microsoft has waged anunlawful campaign in defense of its monopoly position in themarket for operating systems designed to run on Intel-compatiblepersonal computers ("PCs"). Specifically, the plaintiffs contendthat Microsoft violated § 2 of the Sherman Act by engaging in aseries of exclusionary, anticompetitive, and predatory acts tomaintain its monopoly power. They also assert that Microsoftattempted, albeit unsuccessfully to date, to monopolize the Webbrowser market, likewise in violation of § 2. Finally, they contendthat certain steps taken by Microsoft as part of its campaign toprotect its monopoly power, namely tying its browser to itsoperating system and entering into exclusive dealing arrangements,violated § 1 of the Act.
Upon consideration of the Court's Findings of Fact ("Findings"),filed herein on November 5, 1999, as amended on December 21, 1999,the proposed conclusions of law submitted by the parties, thebriefs of amici curiae, and the argument of counsel thereon, theCourt concludes that Microsoft maintained its monopoly power byanticompetitive means and attempted to monopolize the Web browsermarket, both in violation of § 2. Microsoft also violated § 1 ofthe Sherman Act by unlawfully tying its Web browser to itsoperating system. The facts found do not support the conclusion,however, that the effect of Microsoft's marketing arrangementswith other companies constituted unlawful exclusive dealing undercriteria established by leading decisions under § 1.
The nineteen states and the District of Columbia ("the plaintiffstates") seek to ground liability additionally under theirrespective antitrust laws. The Court is persuaded that theevidence in the record proving violations of the Sherman Act alsosatisfies the elements of analogous causes of action arising underthe laws of each plaintiff state. For this reason, and for othersstated below, the Court holds Microsoft liable under thoseparticular state laws as well.
I. SECTION TWO OF THE SHERMAN ACT
A. Maintenance of Monopoly Power by Anticompetitive Means
Section 2 of the Sherman Act declares that it is unlawful for aperson or firm to "monopolize . . . any part of the trade orcommerce among the several States, or with foreign nations. . . ."15 U.S.C. § 2. This language operates to limit the means bywhich a firm may lawfully either acquire or perpetuate monopolypower. Specifically, a firm violates § 2 if it attains orpreserves monopoly power through anticompetitive acts. See UnitedStates v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) ("Theoffense of monopoly power under § 2 of the Sherman Act has twoelements: (1) the possession of monopoly power in the relevantmarket and (2) the willful acquisition or maintenance of thatpower as distinguished from growth or development as a consequenceof a superior product, business acumen, or historic accident.");Eastman Kodak Co. v. Image Technical Services, Inc.,504 U.S. 451, 488 (1992) (Scalia, J., dissenting) ("Our § 2 monopolizationdoctrines are . . . directed to discrete situations in which adefendant's possession of substantial market power, combined withhis exclusionary or anticompetitive behavior, threatens to defeator forestall the corrective forces of competitionand thereby sustain or extend the defendant's agglomeration ofpower.").
1. Monopoly Power
The threshold element of a § 2 monopolization offense being "thepossession of monopoly power in the relevant market," Grinnell,384 U.S. at 570, the Court must first ascertain the boundaries ofthe commercial activity that can be termed the "relevant market."See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp.,382 U.S. 172, 177 (1965) ("Without a definition of [the relevant]market there is no way to measure [defendant's] ability to lessenor destroy competition."). Next, the Court must assess thedefendant's actual power to control prices in — or to excludecompetition from — that market. See United States v. E. I. du Pontde Nemours & Co., 351 U.S. 377, 391 (1956) ("Monopoly power is thepower to control prices or exclude competition.").
In this case, the plaintiffs postulated the relevant market asbeing the worldwide licensing of Intel-compatible PC operatingsystems. Whether this zone of commercial activity actuallyqualifies as a market, "monopolization of which may be illegal,"depends on whether it includes all products "reasonablyinterchangeable by consumers for the same purposes." du Pont, 351U.S. at 395. See Rothery Storage & Van Co. v. Atlas Van Lines,Inc., 792 F.2d 210, 218 (D.C. Cir. 1986) ("Because the ability ofconsumers to turn to other suppliers restrains a firm from raisingprices above the competitive level, the definition of the`relevant market' rests on a determination of availablesubstitutes.").
The Court has already found, based on the evidence in this record,that there are currently no products — and that there are notlikely to be any in the near future — that a significantpercentage of computer users worldwide could substitute forIntel-compatible PC operating systems without incurringsubstantial costs. Findings ¶¶ 18-29. The Court has further foundthat no firm not currently marketing Intel-compatible PC operatingsystems could start doing so in a way that would, within areasonably short period of time, present a significant percentageof such consumers with a viable alternative to existingIntel-compatible PC operating systems. Id. ¶¶ 18, 30-32. Fromthese facts, the Court has inferred that if a single firm orcartel controlled the licensing of all Intel-compatible PCoperating systems worldwide, it could set the price of a licensesubstantially above that which would be charged in a competitivemarket — and leave the price there for a significant period oftime — without losing so many customers as to make the actionunprofitable. Id. ¶ 18. This inference, in turn, has led the Courtto find that the licensing of all Intel-compatible PC operatingsystems worldwide does in fact constitute the relevant market inthe context of the plaintiffs' monopoly maintenance claim. Id.
The plaintiffs proved at trial that Microsoft possesses adominant, persistent, and increasing share of the relevant market.Microsoft's share of the worldwide market for Intel-compatible PCoperating systems currently exceeds ninety-five percent, and thefirm's share would stand well above eighty percent even if the MacOS were included in the market. Id. ¶ 35. The plaintiffs alsoproved that the applications barrier to entry protects Microsoft'sdominant market share. Id. ¶¶ 36-52. This barrier ensures that noIntel-compatible PC operating system other than Windows canattract significant consumer demand, and the barrier would operateto the same effect even if Microsoft held its prices substantiallyabove the competitive level for a protracted period of time. Id.Together, the proof of dominant market share and the existence ofa substantial barrier to effective entry create the presumptionthat Microsoft enjoys monopoly power. See United States v. AT&TCo., 524 F. Supp. 1336, 1347-48 (D.D.C. 1981)("a persuasive showing . . . that defendants have monopolypower . . . through various barriers to entry, . . . in combinationwith the evidence of market shares, suffice[s] at least to meetthe government's initial burden, and the burden is then appropriatelyplaced upon defendants to rebut the existence and significance ofbarriers to entry"), quoted with approval in Southern Pac.Communications Co. v. AT&T Co., 740 F.2d 980, 1001-02(D.C. Cir. 1984).
At trial, Microsoft attempted to rebut the presumption of monopolypower with evidence of both putative constraints on its ability toexercise such power and behavior of its own that is supposedlyinconsistent with the possession of monopoly power. None of thepurported constraints, however, actually deprive Microsoft of "theability (1) to price substantially above the competitive level and(2) to persist in doing so for a significant period withouterosion by new entry or expansion." IIA Phillip E. Areeda, HerbertHovenkamp & John L. Solow, Antitrust Law ¶ 501, at 86 (1995)(emphasis in original); see Findings ¶¶ 57-60. Furthermore,neither Microsoft's efforts at technical innovation nor itspricing behavior is inconsistent with the possession of monopolypower. Id. ¶¶ 61-66.
Even if Microsoft's rebuttal had attenuated the presumptioncreated by the prima facie showing of monopoly power,corroborative evidence of monopoly power abounds in this record:Neither Microsoft nor its OEM customers believe that the latterhave — or will have anytime soon — even a single, commerciallyviable alternative to licensing Windows for pre-installation ontheir PCs. Id. ¶¶ 53-55; cf. Rothery, 792 F.2d at 219 n. 4 ("weassume that economic actors usually have accurate perceptions ofeconomic realities"). Moreover, over the past several years,Microsoft has comported itself in a way that could only beconsistent with rational behavior for a profit-maximizing firm ifthe firm knew that it possessed monopoly power, and if it wasmotivated by a desire to preserve the barrier to entry protectingthat power. Findings ¶¶ 67, 99, 136, 141, 215-16, 241, 261-62,286, 291, 330, 355, 393, 407.
In short, the proof of Microsoft's dominant, persistent marketshare protected by a substantial barrier to entry, together withMicrosoft's failure to rebut that prima facie showing effectivelyand the additional indicia of monopoly power, have compelled theCourt to find as fact that Microsoft enjoys monopoly power in therelevant market. Id. ¶ 33.
2. Maintenance of Monopoly Power by Anticompetitive Means
In a § 2 case, once it is proved that the defendant possessesmonopoly power in a relevant market, liability for monopolizationdepends on a showing that the defendant used anticompetitivemethods to achieve or maintain its position. See United States v.Grinnell, 384 U.S. 563, 570-71 (1966); Eastman Kodak Co. v. ImageTechnical Services, Inc., 504 U.S. 451, 488 (1992) (Scalia, J.,dissenting); Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1353(Fed. Cir. 1999). Prior cases have established an analyticalapproach to determining whether challenged conduct should bedeemed anticompetitive in the context of a monopoly maintenanceclaim. The threshold question in this analysis is whether thedefendant's conduct is "exclusionary" — that is, whether it hasrestricted significantly, or threatens to restrict significantly,the ability of other firms to compete in the relevant market onthe merits of what they offer customers. See Eastman Kodak, 504U.S. at 488 (Scalia, J., dissenting) (§ 2 is "directed to discretesituations" in which the behavior of firms with monopoly power"threatens to defeat or forestall the corrective forces ofcompetition").1
If the evidence reveals a significant exclusionary impact in therelevant market, the defendant's conduct will be labeled"anticompetitive" — and liability will attach — unless thedefendant comes forward with specific, procompetitive businessmotivations that explain the full extent of its exclusionaryconduct. See Eastman Kodak, 504 U.S. at 483 (declining to grantdefendant's motion for summary judgment because factual questionsremained as to whether defendant's asserted justifications weresufficient to explain the exclusionary conduct or were insteadmerely pretextual); see also Aspen Skiing Co. v. Aspen HighlandsSkiing Corp., 472 U.S. 585, 605 n. 32 (1985) (holding that thesecond element of a monopoly maintenance claim is satisfied byproof of "`behavior that not only (1) tends to impair theopportunities of rivals, but also (2) either does not furthercompetition on the merits or does so in an unnecessarilyrestrictive way'") (quoting III Phillip E. Areeda & Donald F.Turner, Antitrust Law ¶ 626b, at 78 (1978)).
If the defendant with monopoly power consciously antagonized itscustomers by making its products less attractive to them — or ifit incurred other costs, such as large outlays of developmentcapital and forfeited opportunities to derive revenue from it —with no prospect of compensation other than the erection orpreservation of barriers against competition by equally efficientfirms, the Court may deem the defendant's conduct "predatory." Asthe D.C. Circuit stated in Neumann v. Reinforced Earth Co.,
[P]redation involves aggression against business rivals through the use of business practices that would not be considered profit maximizing except for the expectation that (1) actual rivals will be driven from the market, or the entry of potential rivals blocked or delayed, so that the predator will gain or retain a market share sufficient to command monopoly profits, or (2) rivals will be chastened sufficiently to abandon competitive behavior the predator finds threatening to its realization of monopoly profits.
786 F.2d 424, 427 (D.C. Cir. 1986).
Proof that a profit-maximizing firm took predatory action shouldsuffice to demonstrate the threat of substantial exclusionaryeffect; to hold otherwise would be to ascribe irrational behaviorto the defendant. Moreover, predatory conduct, by definition aswell as by nature, lacks procompetitive business motivation. SeeAspen Skiing, 472 U.S. at 610-11 (evidence indicating thatdefendant's conduct was "motivated entirely by a decision to avoidproviding any benefits" to a rival supported the inference thatdefendant's conduct "was not motivated by efficiency concerns").In other words, predatory behavior is patently anticompetitive.Proof that a firm with monopoly power engaged in such behaviorthus necessitates a finding of liability under § 2.
In this case, Microsoft early on recognized middleware as theTrojan horse that, once having, in effect, infiltrated theapplications barrier, could enable rival operating systems toenter the market for Intel-compatible PC operating systemsunimpeded. Simply put, middleware threatened to demolishMicrosoft's coveted monopoly power. Alerted to the threat,Microsoft strove over a period of approximately four years toprevent middleware technologies from fostering the development ofenough full-featured, cross-platform applications to erode theapplications barrier. In pursuit of this goal, Microsoft sought toconvince developers to concentrateon Windows-specific APIs and ignore interfaces exposed by thetwo incarnations of middleware that posed the greatest threat,namely, Netscape's Navigator Web browser and Sun's implementationof the Java technology. Microsoft's campaign succeeded inpreventing — for several years, and perhaps permanently —Navigator and Java from fulfilling their potential to open themarket for Intel-compatible PC operating systems to competitionon the merits. Findings ¶¶ 133, 378. Because Microsoft achievedthis result through exclusionary acts that lacked procompetitivejustification, the Court deems Microsoft's conduct the maintenanceof monopoly power by anticompetitive means.
a. Combating the Browser Threat
The same ambition that inspired Microsoft's efforts to induceIntel, Apple, RealNetworks and IBM to desist from certaintechnological innovations and business initiatives — namely, thedesire to preserve the applications barrier — motivated the firm'sJune 1995 proposal that Netscape abstain from releasingplatform-level browsing software for 32-bit versions of Windows.See id. ¶¶ 79-80, 93-132. This proposal, together with thepunitive measures that Microsoft inflicted on Netscape when itrebuffed the overture, illuminates the context in whichMicrosoft's subsequent behavior toward PC manufacturers ("OEMs"),Internet access providers ("IAPs"), and other firms must beviewed.
When Netscape refused to abandon its efforts to develop Navigatorinto a substantial platform for applications development,Microsoft focused its efforts on minimizing the extent to whichdevelopers would avail themselves of interfaces exposed by thatnascent platform. Microsoft realized that the extent ofdevelopers' reliance on Netscape's browser platform would dependlargely on the size and trajectory of Navigator's share of browserusage. Microsoft thus set out to maximize Internet Explorer'sshare of browser usage at Navigator's expense. Id. ¶¶ 133, 359-61.The core of this strategy was ensuring that the firms comprisingthe most effective channels for the generation of browser usagewould devote their distributional and promotional efforts toInternet Explorer rather than Navigator. Recognizing thatpre-installation by OEMs and bundling with the proprietarysoftware of IAPs led more directly and efficiently to browserusage than any other practices in the industry, Microsoft devotedmajor efforts to usurping those two channels. Id. ¶ 143.
i. The OEM Channel
With respect to OEMs, Microsoft's campaign proceeded on threefronts. First, Microsoft bound Internet Explorer to Windows withcontractual and, later, technological shackles in order to ensurethe prominent (and ultimately permanent) presence of InternetExplorer on every Windows user's PC system, and to increase thecosts attendant to installing and using Navigator on any PCsrunning Windows. Id. ¶¶ 155-74. Second, Microsoft imposedstringent limits on the freedom of OEMs to reconfigure or modifyWindows 95 and Windows 98 in ways that might enable OEMs togenerate usage for Navigator in spite of the contractual andtechnological devices that Microsoft had employed to bind InternetExplorer to Windows. Id. ¶¶ 202-29. Finally, Microsoft usedincentives and threats to induce especially important OEMs todesign their distributional, promotional and technical efforts tofavor Internet Explorer to the exclusion of Navigator. Id. ¶¶230-38.
Microsoft's actions increased the likelihood that pre-installationof Navigator onto Windows would cause user confusion and systemdegradation, and therefore lead to higher support costs andreduced sales for the OEMs. Id. ¶¶ 159, 172. Not willing to takeactions that would jeopardize their already slender profitmargins, OEMs felt compelled by Microsoft's actions to reducedrastically their distribution and promotion of Navigator. Id.¶¶ 239, 241. The substantial inducements that Microsoft held out tothe largest OEMs only further reduced the distribution andpromotion of Navigator in the OEM channel. Id. ¶¶ 230, 233. Theresponse of OEMs to Microsoft's efforts had a dramatic, negativeimpact on Navigator's usage share. Id. ¶ 376. The drop in usageshare, in turn, has prevented Navigator from being the vehicle toopen the relevant market to competition on the merits. Id. ¶¶377-78, 383.
Microsoft fails to advance any legitimate business objectives thatactually explain the full extent of this significant exclusionaryimpact. The Court has already found that no quality-related ortechnical justifications fully explain Microsoft's refusal tolicense Windows 95 to OEMs without version 1.0 through 4.0 ofInternet Explorer, or its refusal to permit them to uninstallversions 3.0 and 4.0. Id. ¶¶ 175-76. The same lack ofjustification applies to Microsoft's decision not to offer abrowserless version of Windows 98 to consumers and OEMs, id. ¶177, as well as to its claim that it could offer "best of breed"implementations of functionalities in Web browsers. With respectto the latter assertion, Internet Explorer is not demonstrably thecurrent "best of breed" Web browser, nor is it likely to be so atany time in the immediate future. The fact that Microsoft itselfwas aware of this reality only further strengthens the conclusionthat Microsoft's decision to tie Internet Explorer to Windowscannot truly be explained as an attempt to benefit consumers andimprove the efficiency of the software market generally, butrather as part of a larger campaign to quash innovation thatthreatened its monopoly position. Id. ¶¶ 195, 198.
To the extent that Microsoft still asserts a copyright defense,relying upon federal copyright law as a justification for itsvarious restrictions on OEMs, that defense neither explains noroperates to immunize Microsoft's conduct under the Sherman Act. Asa general proposition, Microsoft argues that the federal CopyrightAct, 17 U.S.C. § 101 et seq., endows the holder of a validcopyright in software with an absolute right to prevent licensees,in this case the OEMs, from shipping modified versions of itsproduct without its express permission. In truth, Windows 95 andWindows 98 are covered by copyright registrations, Findings ¶ 228,that "constitute prima facie evidence of the validity of thecopyright." 17 U.S.C. § 410(c). But the validity of Microsoft'scopyrights has never been in doubt; the issue is what, precisely,they protect.
Microsoft has presented no evidence that the contractual (or thetechnological) restrictions it placed on OEMs' ability to alterWindows derive from any of the enumerated rights explicitlygranted to a copyright holder under the Copyright Act. Instead,Microsoft argues that the restrictions "simply restate" anexpansive right to preserve the "integrity"of its copyrightedsoftware against any "distortion," "truncation," or "alteration,"a right nowhere mentioned among the Copyright Act's list ofexclusive rights, 17 U.S.C. § 106, thus raising some doubt as toits existence. See Twentieth Century Music Corp. v. Aiken,422 U.S. 151, 155 (1973) (not all uses of a work are within copyrightholder's control; rights limited to specifically granted"exclusive rights"); cf. 17 U.S.C. § 501(a) (infringement meansviolating specifically enumerated rights).2
It is also well settled that a copyright holder is not by reasonthereof entitled to employ the perquisites in ways that directlythreaten competition. See, e.g.,Eastman Kodak, 504 U.S. at 479 n. 29 ("The Court has held manytimes that power gained through some natural and legal advantagesuch as a . . . copyright, . . . can give rise to liability if`a seller exploits his dominant position in one market to expandhis empire into the next.'") (quoting Times-Picayune Pub. Co.v. United States, 345 U.S. 594, 611 (1953)); Square D Co. v.Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 421 (1986);Data General Corp. v. Grumman Systems Support Corp., 36 F.3d 1147,1186 n. 63 (1st Cir. 1994) (a copyright does not exempt its holderfrom antitrust inquiry where the copyright is used as part of ascheme to monopolize); see also Image Technical Services, Inc.v. Eastman Kodak Co., 125 F.3d 1195, 1219 (9th Cir. 1997),cert. denied, 523 U.S. 1094 (1998) ("Neither the aims of intellectualproperty law, nor the antitrust laws justify allowing a monopolistto rely upon a pretextual business justification to maskanticompetitive conduct."). Even constitutional privileges conferno immunity when they are abused for anticompetitive purposes.See Lorain Journal Co. v. United States, 342 U.S. 143,155-56 (1951). The Court has already found that the true impetusbehind Microsoft's restrictions on OEMs was not its desire tomaintain a somewhat amorphous quality it refers to as the "integrity"of the Windows platform, nor even to ensure that Windows affordeda uniform and stable platform for applications development. Microsoftitself engendered, or at least countenanced, instability andinconsistency by permitting Microsoft-friendly modifications tothe desktop and boot sequence, and by releasing updates to InternetExplorer more frequently than it released new versions of Windows.Findings ¶ 226. Add to this the fact that the modifications OEMsdesired to make would not have removed or altered any WindowsAPIs, and thus would not have disrupted any of Windows'functionalities, and it is apparent that Microsoft's conduct iseffectively explained by its foreboding that OEMs would pre-installand give prominent placement to middleware like Navigator thatcould attract enough developer attention to weaken the applicationsbarrier to entry. Id. ¶ 227. In short, if Microsoft wastruly inspired by a genuine concern for maximizing consumersatisfaction, as well as preserving its substantial investmentin a worthy product, then it would have relied more on the powerof the very competitive PC market, and less on its own marketpower, to prevent OEMs from making modifications that consumersdid not want. Id. ¶¶ 225, 228-29.
ii. The IAP Channel
Microsoft adopted similarly aggressive measures to ensure that theIAP channel would generate browser usage share for InternetExplorer rather than Navigator. To begin with, Microsoft licensedInternet Explorer and the Internet Explorer Access Kit to hundredsof IAPs for no charge. Id. ¶¶ 250-51. Then, Microsoft extendedvaluable promotional treatment to the ten most important IAPs inexchange for their commitment to promote and distribute InternetExplorer and to exile Navigator from the desktop. Id. ¶¶ 255-58,261, 272, 288-90, 305-06. Finally, in exchange for efforts toupgrade existing subscribers to client software that came bundledwith Internet Explorer instead of Navigator, Microsoft grantedrebates — and in some cases made outright payments — to those sameIAPs. Id. ¶¶ 259-60, 295. Given the importance of the IAP channelto browser usage share, it is fair to conclude that theseinducements and restrictions contributed significantly to thedrastic changes that have in fact occurred in Internet Explorer'sand Navigator's respective usage shares. Id. ¶¶ 144-47, 309-10.Microsoft's actions in the IAP channel thereby contributedsignificantly to preserving the applications barrier to entry.
There are no valid reasons to justify the full extent ofMicrosoft's exclusionary behavior in the IAP channel. A desire tolimit free riding on the firm's investment in consumer-orientedfeatures, such as the Referral Server and the Online ServicesFolder, can, in some circumstances, qualify as a procompetitivebusiness motivation; but that motivation does not explain the fullextent of the restrictions that Microsoft actually imposed uponIAPs. Under the terms of the agreements, an IAP's failure to keepNavigator shipments below the specified percentage primedMicrosoft's contractual right to dismiss the IAP from its ownfavored position in the Referral Server or the Online ServicesFolder. This was true even if the IAP had refrained from promotingNavigator in its client software included with Windows, had purgedall mention of Navigator from any Web site directly connected tothe Referral Server, and had distributed no browser other thanInternet Explorer to the new subscribers it gleaned from theWindows desktop. Id. ¶¶ 258, 262, 289. Thus, Microsoft'srestrictions closed off a substantial amount of distribution thatwould not have constituted a free ride to Navigator.
Nor can an ostensibly procompetitive desire to "foster brandassociation" explain the full extent of Microsoft's restrictions.If Microsoft's only concern had been brand association,restrictions on the ability of IAPs to promote Navigator likelywould have sufficed. It is doubtful that Microsoft would have paidIAPs to induce their existing subscribers to drop Navigator infavor of Internet Explorer unless it was motivated by a desire toextinguish Navigator as a threat. See id. ¶¶ 259, 295. Moregenerally, it is crucial to an understanding of Microsoft'sintentions to recognize that Microsoft paid for the fealty of IAPswith large investments in software development for their benefit,conceded opportunities to take a profit, suffered competitivedisadvantage to Microsoft's own OLS, and gave outright bounties.Id. ¶¶ 259-60, 277, 284-86, 295. Considering that Microsoft neverintended to derive appreciable revenue from Internet Explorerdirectly, id. ¶¶ 136-37, these sacrifices could only haverepresented rational business judgments to the extent that theypromised to diminish Navigator's share of browser usage andthereby contribute significantly to eliminating a threat to theapplications barrier to entry. Id. ¶ 291. Because the full extentof Microsoft's exclusionary initiatives in the IAP channel canonly be explained by the desire to hinder competition on themerits in the relevant market, those initiatives must be labeledanticompetitive.
In sum, the efforts Microsoft directed at OEMs and IAPssuccessfully ostracized Navigator as a practical matter from thetwo channels that lead most efficiently to browser usage. Evenwhen viewed independently, these two prongs of Microsoft'scampaign threatened to "forestall the corrective forces ofcompetition" and thereby perpetuate Microsoft's monopoly power inthe relevant market. Eastman Kodak Co. v. Image TechnicalServices, Inc., 504 U.S. 451, 488 (1992) (Scalia, J., dissenting).Therefore, whether they are viewed separately or together, the OEMand IAP components of Microsoft's anticompetitive campaign merit afinding of liability under § 2.
iii. ICPs, ISVs and Apple
No other distribution channels for browsing software approach theefficiency of OEM pre-installation and IAP bundling. Findings ¶¶144-47. Nevertheless, protecting the applications barrier to entrywas so critical to Microsoft that the firm was willing to investsubstantial resources to enlist ICPs, ISVs, and Apple in itscampaign against the browser threat. By extracting from Appleterms that significantly diminished the usage of Navigator on theMac OS, Microsoft helped to ensure that developers would not viewNavigator as truly cross-platform middleware. Id. ¶ 356. Bygranting ICPs and ISVs freelicenses to bundle Internet Explorer with their offerings, andby exchanging other valuable inducements for their agreement todistribute, promote and rely on Internet Explorer rather thanNavigator, Microsoft directly induced developers to focus on itsown APIs rather than ones exposed by Navigator. Id. ¶¶ 334-35,340. These measures supplemented Microsoft's efforts in the OEMand IAP channels.
Just as they fail to account for the measures that Microsoft tookin the IAP channel, the goals of preventing free riding andpreserving brand association fail to explain the full extent ofMicrosoft's actions in the ICP channel. Id. ¶¶ 329-30. Withrespect to the ISV agreements, Microsoft has put forward noprocompetitive business ends whatsoever to justify theirexclusionary terms. See id. ¶¶ 339-40. Finally, Microsoft'swillingness to make the sacrifices involved in cancelling MacOffice, and the concessions relating to browsing software that itdemanded from Apple, can only be explained by Microsoft's desireto protect the applications barrier to entry from the threat posedby Navigator. Id. ¶ 355. Thus, once again, Microsoft is unable tojustify the full extent of its restrictive behavior.
b. Combating the Java Threat
As part of its grand strategy to protect the applications barrier,Microsoft employed an array of tactics designed to maximize thedifficulty with which applications written in Java could be portedfrom Windows to other platforms, and vice versa. The first ofthese measures was the creation of a Java implementation forWindows that undermined portability and was incompatible withother implementations. Id. ¶¶ 387-93. Microsoft then induceddevelopers to use its implementation of Java rather thanSun-compliant ones. It pursued this tactic directly, by means ofsubterfuge and barter, and indirectly, through its campaign tominimize Navigator's usage share. Id. ¶¶ 394, 396-97, 399-400,401-03. In a separate effort to prevent the development of easilyportable Java applications, Microsoft used its monopoly power toprevent firms such as Intel from aiding in the creation ofcross-platform interfaces. Id. ¶¶ 404-06.
Microsoft's tactics induced many Java developers to write theirapplications using Microsoft's developer tools and to refrain fromdistributing Sun-compliant JVMs to Windows users. This stratagemhas effectively resulted in fewer applications that are easilyportable. Id. ¶ 398. What is more, Microsoft's actions interferedwith the development of new cross-platform Java interfaces. Id. ¶406. It is not clear whether, absent Microsoft's machinations,Sun's Java efforts would by now have facilitated porting betweenWindows and other platforms to a degree sufficient to render theapplications barrier to entry vulnerable. It is clear, however,that Microsoft's actions markedly impeded Java's progress to thatend. Id. ¶ 407. The evidence thus compels the conclusion thatMicrosoft's actions with respect to Java have restrictedsignificantly the ability of other firms to compete on the meritsin the market for Intel-compatible PC operating systems.
Microsoft's actions to counter the Java threat went far beyond thedevelopment of an attractive alternative to Sun's implementationof the technology. Specifically, Microsoft successfully pressuredIntel, which was dependent in many ways on Microsoft's goodgraces, to abstain from aiding in Sun's and Netscape's Javadevelopment work. Id. ¶¶ 396, 406. Microsoft also deliberatelydesigned its Java development tools so that developers who wereopting for portability over performance would neverthelessunwittingly write Java applications that would run only onWindows. Id. ¶ 394. Moreover, Microsoft's means of luringdevelopers to its Java implementation included maximizing InternetExplorer's share of browser usage at Navigator's expense in waysthe Court has already held to be anticompetitive. See supra, §I.A.2.a. Finally, Microsoft impelled ISVs, which are dependentuponMicrosoft for technical information and certifications relatingto Windows, to use and distribute Microsoft's version of theWindows JVM rather than any Sun-compliant version. Id. ¶¶401-03.
These actions cannot be described as competition on the merits,and they did not benefit consumers. In fact, Microsoft's actionsdid not even benefit Microsoft in the short run, for the firm'sefforts to create incompatibility between its JVM for Windows andothers' JVMs for Windows resulted in fewer total applicationsbeing able to run on Windows than otherwise would have beenwritten. Microsoft was willing nevertheless to obstruct thedevelopment of Windows-compatible applications if they would beeasy to port to other platforms and would thus diminish theapplications barrier to entry. Id. ¶ 407.
c. Microsoft's Conduct Taken As a Whole
As the foregoing discussion illustrates, Microsoft's campaign toprotect the applications barrier from erosion by network-centricmiddleware can be broken down into discrete categories ofactivity, several of which on their own independently satisfy thesecond element of a § 2 monopoly maintenance claim. But only whenthe separate categories of conduct are viewed, as they should be,as a single, well-coordinated course of action does the fullextent of the violence that Microsoft has done to the competitiveprocess reveal itself. See Continental Ore Co. v. Union Carbide &Carbon Corp., 370 U.S. 690, 699 (1962) (counseling that in ShermanAct cases "plaintiffs should be given the full benefit of theirproof without tightly compartmentalizing the various factualcomponents and wiping the slate clean after scrutiny of each"). Inessence, Microsoft mounted a deliberate assault uponentrepreneurial efforts that, left to rise or fall on their ownmerits, could well have enabled the introduction of competitioninto the market for Intel-compatible PC operating systems. Id. ¶411. While the evidence does not prove that they would havesucceeded absent Microsoft's actions, it does reveal thatMicrosoft placed an oppressive thumb on the scale of competitivefortune, thereby effectively guaranteeing its continued dominancein the relevant market. More broadly, Microsoft's anticompetitiveactions trammeled the competitive process through which thecomputer software industry generally stimulates innovation andconduces to the optimum benefit of consumers. Id. ¶ 412.
Viewing Microsoft's conduct as a whole also reinforces theconviction that it was predacious. Microsoft paid vast sums ofmoney, and renounced many millions more in lost revenue everyyear, in order to induce firms to take actions that would helpenhance Internet Explorer's share of browser usage at Navigator'sexpense. Id. ¶ 139. These outlays cannot be explained assubventions to maximize return from Internet Explorer. Microsofthas no intention of ever charging for licenses to use ordistribute its browser. Id. ¶¶ 137-38. Moreover, neither thedesire to bolster demand for Windows nor the prospect of ancillaryrevenues from Internet Explorer can explain the lengths to whichMicrosoft has gone. In fact, Microsoft has expended wealth andforesworn opportunities to realize more in a manner and to anextent that can only represent a rational investment if itspurpose was to perpetuate the applications barrier to entry. Id.¶¶ 136, 139-42. Because Microsoft's business practices "would notbe considered profit maximizing except for the expectationthat . . . the entry of potential rivals" into the market forIntel-compatible PC operating systems will be "blocked ordelayed," Neumann v. Reinforced Earth Co., 786 F.2d 424, 427 (D.C.Cir. 1986), Microsoft's campaign must be termed predatory. Sincethe Court has already found that Microsoft possesses monopolypower, see supra, § I.A.1, the predatory nature of the firm'sconduct compels the Court to hold Microsoft liable under § 2 ofthe Sherman Act.
B. Attempting to Obtain Monopoly Power in a Second Market by Anticompetitive Means
In addition to condemning actual monopolization, § 2 of theSherman Act declares that it is unlawful for a person or firm to"attempt to monopolize . . . any part of the trade or commerceamong the several States, or with foreign nations. . . ."15 U.S.C. § 2. Relying on this language, the plaintiffs assert thatMicrosoft's anticompetitive efforts to maintain its monopoly powerin the market for Intel-compatible PC operating systems warrantadditional liability as an illegal attempt to amass monopoly powerin "the browser market." The Court agrees.
In order for liability to attach for attempted monopolization, aplaintiff generally must prove "(1) that the defendant has engagedin predatory or anticompetitive conduct with (2) a specific intentto monopolize," and (3) that there is a "dangerous probability"that the defendant will succeed in achieving monopoly power.Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993).Microsoft's June 1995 proposal that Netscape abandon the field toMicrosoft in the market for browsing technology for Windows, andits subsequent, well-documented efforts to overwhelm Navigator'sbrowser usage share with a proliferation of Internet Explorerbrowsers inextricably attached to Windows, clearly meet the firstelement of the offense.
The evidence in this record also satisfies the requirement ofspecific intent. Microsoft's effort to convince Netscape to stopdeveloping platform-level browsing software for the 32-bitversions of Windows was made with full knowledge that Netscape'sacquiescence in this market allocation scheme would, without more,have left Internet Explorer with such a large share of browserusage as to endow Microsoft with de facto monopoly power in thebrowser market. Findings ¶¶ 79-89.
When Netscape refused to abandon the development of browsingsoftware for 32-bit versions of Windows, Microsoft's strategy forprotecting the applications barrier became one of expandingInternet Explorer's share of browser usage — and simultaneouslydepressing Navigator's share — to an extent sufficient todemonstrate to developers that Navigator would never emerge as thestandard software employed to browse the Web. Id. ¶ 133. WhileMicrosoft's top executives never expressly declared acquisition ofmonopoly power in the browser market to be the objective, theyknew, or should have known, that the tactics they actuallyemployed were likely to push Internet Explorer's share to thoseextreme heights. Navigator's slow demise would leave a competitivevacuum for only Internet Explorer to fill. Yet, there is noevidence that Microsoft tried — or even considered trying — toprevent its anticompetitive campaign from achieving overkill.Under these circumstances, it is fair to presume that thewrongdoer intended "the probable consequences of its acts." IIIAPhillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 805b, at324 (1996); see also Spectrum Sports, 506 U.S. at 459 (proof of"`predatory' tactics . . . may be sufficient to prove thenecessary intent to monopolize, which is something more than anintent to compete vigorously"). Therefore, the facts of this casesuffice to prove the element of specific intent.
Even if the first two elements of the offense are met, however, adefendant may not be held liable for attempted monopolizationabsent proof that its anticompetitive conduct created a dangerousprobability of achieving the objective of monopoly power in arelevant market. Id. The evidence supports the conclusion thatMicrosoft's actions did pose such a danger.
At the time Microsoft presented its market allocation proposal toNetscape, Navigator's share of browser usage stood well aboveseventy percent, and no other browser enjoyed more than a fractionof the remainder. Findings ¶¶ 89, 372. HadNetscape accepted Microsoft's offer, nearly all of its sharewould have devolved upon Microsoft, because at that point, nopotential third-party competitor could either claim to rivalNetscape's stature as a browser company or match Microsoft'sability to leverage monopoly power in the market for Intel-compatiblePC operating systems. In the time it would have taken an aspiringentrant to launch a serious effort to compete against InternetExplorer, Microsoft could have erected the same type of barrierthat protects its existing monopoly power by adding proprietaryextensions to the browsing software under its control and byextracting commitments from OEMs, IAPs and others similar to theones discussed in § I.A.2, supra. In short, Netscape's assentto Microsoft's market division proposal would have, instanter,resulted in Microsoft's attainment of monopoly power in a secondmarket. It follows that the proposal itself created a dangerousprobability of that result. See United States v. AmericanAirlines, Inc., 743 F.2d 1114, 1118-19 (5th Cir. 1984) (factthat two executives "arguably" could have implementedmarket-allocation scheme that would have engendered monopoly powerwas sufficient for finding of dangerous probability). Although thedangerous probability was no longer imminent with Netscape'srejection of Microsoft's proposal, "the probability of successat the time the acts occur" is the measure by which liabilityis determined. Id. at 1118.
This conclusion alone is sufficient to support a finding ofliability for attempted monopolization. The Court is nonethelesscompelled to express its further conclusion that the predatorycourse of conduct Microsoft has pursued since June of 1995 hasrevived the dangerous probability that Microsoft will attainmonopoly power in a second market. Internet Explorer's share ofbrowser usage has already risen above fifty percent, will exceedsixty percent by January 2001, and the trend continues unabated.Findings ¶¶ 372-73; see M&M Medical Supplies & Serv., Inc. v.Pleasant Valley Hosp., Inc., 981 F.2d 160, 168 (4th Cir. 1992) (enbanc) ("A rising share may show more probability of success than afalling share. . . . [C]laims involving greater than 50% shareshould be treated as attempts at monopolization when the otherelements for attempted monopolization are also satisfied.")(citations omitted); see also IIIA Phillip E. Areeda & HerbertHovenkamp, Antitrust Law ¶ 807d, at 354-55 (1996) (acknowledgingthe significance of a large, rising market share to the dangerousprobability element).
II. SECTION ONE OF THE SHERMAN ACT
Section 1 of the Sherman Act prohibits "every contract,combination . . ., or conspiracy, in restraint of trade orcommerce. . . ." 15 U.S.C. § 1. Pursuant to this statute, courtshave condemned commercial stratagems that constitute unreasonablerestraints on competition. See Continental T.V., Inc. v. GTESylvania Inc., 433 U.S. 36, 49 (1977); Chicago Board of Trade v.United States, 246 U.S. 231, 238-39 (1918), among them "tyingarrangements" and "exclusive dealing" contracts. Tyingarrangements have been found unlawful where sellers exploit theirmarket power over one product to force unwilling buyers intoacquiring another. See Jefferson Parish Hospital District No. 2 v.Hyde, 466 U.S. 2, 12 (1984); Northern Pac. Ry. Co. v. UnitedStates, 356 U.S. 1, 6 (1958); Times-Picayune Pub. Co. v. UnitedStates, 345 U.S. 594, 605 (1953). Where agreements have beenchallenged as unlawful exclusive dealing, the courts havecondemned only those contractual arrangements that substantiallyforeclose competition in a relevant market by significantlyreducing the number of outlets available to a competitor to reachprospective consumers of the competitor's product. See TampaElectric Co. v. Nashville Coal Co., 365 U.S. 320,327 (1961); Roland Machinery Co. v. Dresser Industries, Inc.,749 F.2d 380, 393 (7th Cir. 1984).
Liability for tying under § 1 exists where (1) two separate"products" are involved; (2) the defendant affords its customersno choice but to take the tied product in order to obtain thetying product; (3) the arrangement affects a substantial volume ofinterstate commerce; and (4) the defendant has "market power" inthe tying product market. Jefferson Parish, 466 U.S. at 12-18. TheSupreme Court has since reaffirmed this test in Eastman Kodak Co.v. Image Technical Services, Inc., 504 U.S. 451, 461-62 (1992).All four elements are required, whether the arrangement issubjected to a per se or Rule of Reason analysis.
The plaintiffs allege that Microsoft's combination of Windows andInternet Explorer by contractual and technological artificesconstitute unlawful tying to the extent that those actions forcedMicrosoft's customers and consumers to take Internet Explorer as acondition of obtaining Windows. While the Court agrees withplaintiffs, and thus holds that Microsoft is liable for illegaltying under § 1, this conclusion is arguably at variance with adecision of the U.S. Court of Appeals for the D.C. Circuit in aclosely related case, and must therefore be explained in somedetail. Whether the decisions are indeed inconsistent is not forthis Court to say.
The decision of the D.C. Circuit in question is United States v.Microsoft Corp., 147 F.3d 935 (D.C. Cir. 1998) ("Microsoft II")which is itself related to an earlier decision of the sameCircuit, United States v. Microsoft Corp., 56 F.3d 1448 (D.C. Cir.1995) ("Microsoft I"). The history of the controversy issufficiently set forth in the appellate opinions and need not berecapitulated here, except to state that those decisionsanticipated the instant case, and that Microsoft II sought toguide this Court, insofar as practicable, in the furtherproceedings it fully expected to ensue on the tying issue.Nevertheless, upon reflection this Court does not believe the D.C.Circuit intended Microsoft II to state a controlling rule of lawfor purposes of this case. As the Microsoft II court itselfacknowledged, the issue before it was the construction to beplaced upon a single provision of a consent decree that, althoughanimated by antitrust considerations, was nevertheless stillprimarily a matter of determining contractual intent. The court ofappeals' observations on the extent to which software productdesign decisions may be subject to judicial scrutiny in the courseof § 1 tying cases are in the strictest sense obiter dicta, andare thus not formally binding. Nevertheless, both prudence and thedeference this Court owes to pronouncements of its own Circuitoblige that it follow in the direction it is pointed until thetrail falters.
The majority opinion in Microsoft II evinces both an extraordinarydegree of respect for changes (including "integration") instigatedby designers of technological products, such as software, in thename of product "improvement," and a corresponding lack ofconfidence in the ability of the courts to distinguish betweenimprovements in fact and improvements in name only, made foranticompetitive purposes. Read literally, the D.C. Circuit'sopinion appears to immunize any product design (or, at least,software product design) from antitrust scrutiny, irrespective ofits effect upon competition, if the software developer canpostulate any "plausible claim" of advantage to its arrangement ofcode. 147 F.3d at 950.
This undemanding test appears to this Court to be inconsistentwith the pertinent Supreme Court precedents in at least threerespects. First, it views the market from the defendant'sperspective, or, more precisely, as the defendant would like tohave the market viewed. Second, it ignores reality: The claim ofadvantage needonly be plausible; it need not be proved. Third, it dispenseswith any balancing of the hypothetical advantages against anyanticompetitive effects.
The two most recent Supreme Court cases to have addressed theissue of product and market definition in the context of ShermanAct tying claims are Jefferson Parish, supra, and Eastman Kodak,supra. In Jefferson Parish, the Supreme Court held that ahospital offering hospital services and anesthesiology services asa package could not be found to have violated the anti-tying rulesunless the evidence established that patients, i.e. consumers,perceived the services as separate products for which they desireda choice, and that the package had the effect of forcing thepatients to purchase an unwanted product. 466 U.S. at 21-24,28-29. In Eastman Kodak the Supreme Court held that a manufacturerof photocopying and micrographic equipment, in agreeing to sellreplacement parts for its machines only to those customers whoalso agreed to purchase repair services from it as well, would beguilty of tying if the evidence at trial established the existenceof consumer demand for parts and services separately. 504 U.S. at463.
Both defendants asserted, as Microsoft does here, that the tiedand tying products were in reality only a single product, or thatevery item was traded in a single market.3 In Jefferson Parish,the defendant contended that it offered a "functionally integratedpackage of services" — a single product — but the Supreme Courtconcluded that the "character of the demand" for the constituentcomponents, not their functional relationship, determined whetherseparate "products" were actually involved. 466 U.S. at 19. InEastman Kodak, the defendant postulated that effectivecompetition in the equipment market precluded the possibility ofthe use of market power anticompetitively in any after-markets forparts or services: Sales of machines, parts, and services were allresponsive to the discipline of the larger equipment market. TheSupreme Court declined to accept this premise in the absence ofevidence of "actual market realities," 504 U.S. at 466-67,ultimately holding that "the proper market definition in this casecan be determined only after a factual inquiry into the`commercial realities' faced by consumers." Id. at 482 (quotingUnited States v. Grinnell Corp., 384 U.S. 563, 572 (1966)).4
In both Jefferson Parish and Eastman Kodak, the Supreme Court alsogave consideration to certain theoretical "valid business reasons"proffered by the defendants as to why the arrangements should bedeemed benign. In Jefferson Parish, the hospital asserted that thecombination of hospital and anesthesia services eliminatedmultiple problems of scheduling, supply, performance standards,and equipment maintenance. 466 U.S. at 43-44. The manufacturer inEastman Kodak contended that quality control, inventorymanagement, and the prevention of free riding justified itsdecision to sell parts only in conjunction with service. 504 U.S.at 483. In neither case did the Supreme Court find thosejustifications sufficient if anticompetitive effects were proved.Id. at 483-86; Jefferson Parish, 466 U.S. at 25 n. 42. Thus, at aminimum, the admonition of the D.C. Circuit in Microsoft II torefrain from any product design assessment as to whether the"integration" of Windows and Internet Exploreris a "net plus," deferring to Microsoft's "plausible claim" thatit is of "some advantage" to consumers, is at odds with the SupremeCourt's own approach.
The significance of those cases, for this Court's purposes, is toteach that resolution of product and market definitional problemsmust depend upon proof of commercial reality, as opposed to whatmight appear to be reasonable. In both cases the Supreme Courtinstructed that product and market definitions were to beascertained by reference to evidence of consumers' perception ofthe nature of the products and the markets for them, rather thanto abstract or metaphysical assumptions as to the configuration ofthe "product" and the "market." Jefferson Parish, 466 U.S. at 18;Eastman Kodak, 504 U.S. at 481-82. In the instant case, thecommercial reality is that consumers today perceive operatingsystems and browsers as separate "products," for which there isseparate demand. Findings ¶¶ 149-54. This is true notwithstandingthe fact that the software code supplying their discretefunctionalities can be commingled in virtually infinitecombinations, rendering each indistinguishable from the whole interms of files of code or any other taxonomy. Id. ¶¶ 149-50,162-63, 187-91.
Proceeding in line with the Supreme Court cases, which areindisputably controlling, this Court first concludes thatMicrosoft possessed "appreciable economic power in the tyingmarket," Eastman Kodak, 504 U.S. at 464, which in this case is themarket for Intel-compatible PC operating systems. See JeffersonParish, 466 U.S. at 14 (defining market power as ability to forcepurchaser to do something that he would not do in competitivemarket); see also Fortner Enterprises, Inc. v. United States SteelCorp., 394 U.S. 495, 504 (1969) (ability to raise prices or toimpose tie-ins on any appreciable number of buyers within thetying product market is sufficient). While courts typically havenot specified a percentage of the market that creates thepresumption of "market power," no court has ever found that therequisite degree of power exceeds the amount necessary for afinding of monopoly power. See Eastman Kodak, 504 U.S. at 481.Because this Court has already found that Microsoft possessesmonopoly power in the worldwide market for Intel-compatible PCoperating systems (i.e., the tying product market), Findings ¶¶18-67, the threshold element of "appreciable economic power" is afortiori met.
Similarly, the Court's Findings strongly support a conclusion thata "not insubstantial" amount of commerce was foreclosed tocompetitors as a result of Microsoft's decision to bundle InternetExplorer with Windows. The controlling consideration under thiselement is "simply whether a total amount of business" that is"substantial enough in terms of dollar-volume so as not to bemerely de minimis" is foreclosed. Fortner, 394 U.S. at 501; cf.International Salt Co. v. United States, 332 U.S. 392, 396 (1947)(unreasonable per se to foreclose competitors from any substantialmarket by a tying arrangement).
Although the Court's Findings do not specify a dollar amount ofbusiness that has been foreclosed to any particular present orpotential competitor of Microsoft in the relevant market,5including Netscape, the Court did find that Microsoft's bundlingpractices caused Navigator's usage share to drop substantiallyfrom 1995 to 1998, and that as a direct result Netscape suffered asevere drop in revenues from lost advertisers, Web traffic andpurchases of server products. It is thus obvious that theforeclosure achieved by Microsoft's refusal to offer InternetExplorer separately from Windows exceeds the SupremeCourt's de minimis threshold. See Digidyne Corp. v. Data GeneralCorp., 734 F.2d 1336, 1341 (9th Cir. 1984) (citing Fortner).
The facts of this case also prove the elements of the forcedbundling requirement. Indeed, the Supreme Court has stated thatthe "essential characteristic" of an illegal tying arrangement isa seller's decision to exploit its market power over the tyingproduct "to force the buyer into the purchase of a tied productthat the buyer either did not want at all, or might have preferredto purchase elsewhere on different terms." Jefferson Parish, 466U.S. at 12. In that regard, the Court has found that, beginningwith the early agreements for Windows 95, Microsoft hasconditioned the provision of a license to distribute Windows onthe OEMs' purchase of Internet Explorer. Findings ¶¶ 158-65. Theagreements prohibited the licensees from ever modifying ordeleting any part of Windows, despite the OEMs' expressed desireto be allowed to do so. Id. ¶¶ 158, 164. As a result, OEMs weregenerally not permitted, with only one brief exception, to satisfyconsumer demand for a browserless version of Windows 95 withoutInternet Explorer. Id. ¶¶ 158, 202. Similarly, Microsoft refusedto license Windows 98 to OEMs unless they also agreed to abstainfrom removing the icons for Internet Explorer from the desktop.Id. ¶ 213. Consumers were also effectively compelled to purchaseInternet Explorer along with Windows 98 by Microsoft's decision tostop including Internet Explorer on the list of programs subjectto the Add/Remove function and by its decision not to respecttheir selection of another browser as their default. Id. ¶¶170-72.
The fact that Microsoft ostensibly priced Internet Explorer atzero does not detract from the conclusion that consumers wereforced to pay, one way or another, for the browser along withWindows. Despite Microsoft's assertion that the Internet Explorertechnologies are not "purchased" since they are included in asingle royalty price paid by OEMs for Windows 98, see Microsoft'sProposed Conclusions of Law at 12-13, it is nevertheless clearthat licensees, including consumers, are forced to take, and payfor, the entire package of software and that any value to beascribed to Internet Explorer is built into this single price. SeeUnited States v. Microsoft Corp., Nos. CIV. A. 98-1232, 98-1233,1998 WL 614485, *12 (D.D.C., Sept. 14, 1998); IIIA Philip E.Areeda & Herbert Hovenkamp, Antitrust Law ¶ 760b6, at 51 (1996)("[T]he tie may be obvious, as in the classic form, or somewhatmore subtle, as when a machine is sold or leased at a price thatcovers `free' servicing."). Moreover, the purpose of the SupremeCourt's "forcing" inquiry is to expose those product bundles thatraise the cost or difficulty of doing business for would-becompetitors to prohibitively high levels, thereby deprivingconsumers of the opportunity to evaluate a competing product onits relative merits. It is not, as Microsoft suggests, simply topunish firms on the basis of an increment in price attributable tothe tied product. See Fortner, 394 U.S. at 512-14 (1969);Jefferson Parish, 466 U.S. at 12-13.
As for the crucial requirement that Windows and Internet Explorerbe deemed "separate products" for a finding of technological tyingliability, this Court's Findings mandate such a conclusion.Considering the "character of demand" for the two products, asopposed to their "functional relation," id. at 19, Web browsersand operating systems are "distinguishable in the eyes of buyers."Id.; Findings ¶¶ 149-54. Consumers often base their choice ofwhich browser should reside on their operating system on theirindividual demand for the specific functionalities orcharacteristics of a particular browser, separate and apart fromthe functionalities afforded by the operating system itself. Id.¶¶ 149-51. Moreover, the behavior of other, lesser softwarevendors confirms that it is certainly efficient to provide anoperating system and a browser separately, or at least inseparable form. Id. ¶ 153. Microsoft is the only firm to refuse tolicense its operating system without a browser. Id.; see BerkeyPhoto, Inc. v. Eastman Kodak Co., 603 F.2d 263, 287 (2d Cir.1979). This Court concludes that Microsoft's decision to offeronly the bundled — "integrated" — version of Windows and InternetExplorer derived not from technical necessity or businessefficiencies; rather, it was the result of a deliberate andpurposeful choice to quell incipient competition before it reachedtruly minatory proportions.
The Court is fully mindful of the reasons for the admonition ofthe D.C. Circuit in Microsoft II of the perils associated with arigid application of the traditional "separate products" test tocomputer software design. Given the virtually infinitemalleability of software code, software upgrades and newapplication features, such as Web browsers, could virtually alwaysbe configured so as to be capable of separate and subsequentinstallation by an immediate licensee or end user. A courtmechanically applying a strict "separate demand" test couldimprovidently wind up condemning "integrations" that representgenuine improvements to software that are benign from thestandpoint of consumer welfare and a competitive market. Clearly,this is not a desirable outcome. Similar concerns have motivatedother courts, as well as the D.C. Circuit, to resist a strictapplication of the "separate products" tests to similar questionsof "technological tying." See, e.g., Foremost Pro Color, Inc. v.Eastman Kodak Co., 703 F.2d 534, 542-43 (9th Cir. 1983); Responseof Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1330(5th Cir. 1976); Telex Corp. v. IBM Corp., 367 F. Supp. 258, 347(N.D.Okla. 1973).
To the extent that the Supreme Court has spoken authoritatively onthese issues, however, this Court is bound to follow its guidanceand is not at liberty to extrapolate a new rule governing thetying of software products. Nevertheless, the Court is confidentthat its conclusion, limited by the unique circumstances of thiscase, is consistent with the Supreme Court's teaching to date.6
B. Exclusive Dealing Arrangements
Microsoft's various contractual agreements with some OLSs, ICPs,ISVs, Compaq and Apple are also called into question by plaintiffsas exclusive dealing arrangements under the language in § 1prohibiting "contract[s] . . . in restraint of trade orcommerce. . . ." 15 U.S.C. § 1. As detailed in § I.A.2, supra, each of theseagreements with Microsoft required the other party to promote anddistribute Internet Explorer to the partial or complete exclusionof Navigator. In exchange, Microsoft offered, to some or all ofthese parties, promotional patronage, substantial financialsubsidies, technical support, and other valuable consideration.Under the clear standards established by the Supreme Court, thesetypes of "vertical restrictions" are subject to a Rule of Reasonanalysis. See Continental T.V., Inc. v. GTE Sylvania Inc.,433 U.S. 36, 49 (1977); Jefferson Parish, 466 U.S. at 44-45 (O'Connor,J., concurring); cf. Business Elecs. Corp. v. Sharp Elecs. Corp.,485 U.S. 717, 724-26 (1988) (holding that Rule of Reason analysispresumptively applies to cases brought under § 1 of the ShermanAct).
Acknowledging that some exclusive dealing arrangements may havebenign objectives and may create significant economic benefits,see Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320,333-35 (1961), courts have tended to condemn under the § 1 Rule ofReason test only those agreements that have the effect offoreclosing a competing manufacturer's brands from the relevantmarket. More specifically, courts are concerned with thoseexclusive dealing arrangements that work to place so much of amarket's available distribution outlets in the hands of a singlefirm as to make it difficult for other firms to continue tocompete effectively, or even to exist, in the relevant market. SeeU.S. Healthcare Inc. v. Healthsource, Inc., 986 F.2d 589, 595 (1stCir. 1993); Interface Group, Inc. v. Massachusetts Port Authority,816 F.2d 9, 11 (1st Cir. 1987) (relying upon III Phillip E. Areeda& Donald F. Turner, Antitrust Law ¶ 732 (1978), Tampa Electric,365 U.S. at 327-29, and Standard Oil Co. v. United States,337 U.S. 293 (1949)).
To evaluate an agreement's likely anticompetitive effects, courtshave consistently looked at a variety of factors, including: (1)the degree of exclusivity and the relevant line of commerceimplicated by the agreements' terms; (2) whether the percentage ofthe market foreclosed by the contracts is substantial enough toimport that rivals will be largely excluded from competition; (3)the agreements' actual anticompetitive effect in the relevant lineof commerce; (4) the existence of any legitimate, procompetitivebusiness justifications offered by the defendant; (5) the lengthand irrevocability of the agreements; and (6) the availability ofany less restrictive means for achieving the same benefits. See,e.g., Tampa Electric, 365 U.S. at 326-35; Roland Machinery Co. v.Dresser Industries, Inc., 749 F.2d 380, 392-95 (7th Cir. 1984);see also XI Herbert Hovenkamp, Antitrust Law ¶ 1820 (1998).
Where courts have found that the agreements in question failed toforeclose absolutely outlets that together accounted for asubstantial percentage of the total distribution of the relevantproducts, they have consistently declined to assign liability.See, e.g., id. ¶ 1821; U.S. Healthcare, 986 F.2d at 596-97;Roland Mach. Co., 749 F.2d at 394 (failure of plaintiff to meetthreshold burden of proving that exclusive dealing arrangement islikely to keep at least one significant competitor from doingbusiness in relevant market dictates no liability under § 1). ThisCourt has previously observed that the case law suggests that,unless the evidence demonstrates that Microsoft's agreementsexcluded Netscape altogether from access to roughly forty percentof the browser market, the Court should decline to find suchagreements in violation of § 1. See United States v. MicrosoftCorp., Nos. CIV. A. 98-1232, 98-1233, 1998 WL 614485, at *19(D.D.C. Sept. 14, 1998) (citing cases that tended to converge uponforty percent foreclosure rate for finding of § 1 liability).
The only agreements revealed by the evidence which could be termedso "exclusive" as to merit scrutiny under the § 1 Rule of Reasontest are the agreements Microsoft signed with Compaq, AOL andseveral other OLSs, the top ICPs, the leading ISVs, and Apple. TheFindings of Fact also establish that, among the OEMs discussedsupra, Compaq was the only one to fully commit itself toMicrosoft's terms for distributing and promoting Internet Explorerto the exclusion of Navigator. Beginning withits decisions in 1996 and 1997 to promote Internet Explorerexclusively for its PC products, Compaq essentially ceased todistribute or pre-install Navigator at all in exchange forsignificant financial remuneration from Microsoft. Findings¶¶ 230-34. AOL's March 12 and October 28, 1996 agreementswith Microsoft also guaranteed that, for all practical purposes,Internet Explorer would be AOL's browser of choice, to be distributedand promoted through AOL's dominant, flagship online service,thus leaving Navigator to fend for itself. Id. ¶¶ 287-90,293-97. In light of the severe shipment quotas and promotionalrestrictions for third-party browsers imposed by the agreements,the fact that Microsoft still permitted AOL to offer Navigatorthrough a few subsidiary channels does not negate this conclusion.The same conclusion as to exclusionary effect can be drawn withrespect to Microsoft's agreements with AT&T WorldNet, Prodigyand CompuServe, since those contract terms were almost identicalto the ones contained in AOL's March 1996 agreement. Id.¶¶ 305-06.
Microsoft also successfully induced some of the most popular ICPsand ISVs to commit to promote, distribute and utilize InternetExplorer technologies exclusively in their Web content in exchangefor valuable placement on the Windows desktop and technicalsupport. Specifically, the "Top Tier" and "Platinum" agreementsthat Microsoft formed with thirty-four of the most popular ICPs onthe Web ensured that Navigator was effectively shut out of thesedistribution outlets for a significant period of time. Id. ¶¶317-22, 325-26, 332. In the same way, Microsoft's "First Wave"contracts provided crucial technical information to dozens ofleading ISVs that agreed to make their Web-centric applicationscompletely reliant on technology specific to Internet Explorer.Id. ¶¶ 337, 339-40. Finally, Apple's 1997 Technology Agreementwith Microsoft prohibited Apple from actively promoting anynon-Microsoft browsing software in any way or from pre-installinga browser other than Internet Explorer. Id. ¶¶ 350-52. Thisarrangement eliminated all meaningful avenues of distribution ofNavigator through Apple. Id.
Notwithstanding the extent to which these "exclusive" distributionagreements preempted the most efficient channels for Navigator toachieve browser usage share, however, the Court concludes thatMicrosoft's multiple agreements with distributors did notultimately deprive Netscape of the ability to have access to everyPC user worldwide to offer an opportunity to install Navigator.Navigator can be downloaded from the Internet. It is availablethrough myriad retail channels. It can (and has been) maileddirectly to an unlimited number of households. How precisely itmanaged to do so is not shown by the evidence, but in 1998 alone,for example, Netscape was able to distribute 160 million copies ofNavigator, contributing to an increase in its installed base from15 million in 1996 to 33 million in December 1998. Id. ¶ 378. Assuch, the evidence does not support a finding that theseagreements completely excluded Netscape from any constituentportion of the worldwide browser market, the relevant line ofcommerce.
The fact that Microsoft's arrangements with various firms did notforeclose enough of the relevant market to constitute a § 1violation in no way detracts from the Court's assignment ofliability for the same arrangements under § 2. As noted above, allof Microsoft's agreements, including the non-exclusive ones,severely restricted Netscape's access to those distributionchannels leading most efficiently to the acquisition of browserusage share. They thus rendered Netscape harmless as a platformthreat and preserved Microsoft's operating system monopoly, inviolation of § 2. But virtually all the leading case authoritydictates that liability under § 1 must hinge upon whether Netscapewas actually shut out of the Web browser market, or at leastwhether it was forced to reduce output below a subsistence level.The fact that Netscape was not allowed access to the most direct,efficient ways to cause the greatest number of consumers to useNavigator is legally irrelevant to a final determination ofplaintiffs' § 1 claims.
Other courts in similar contexts have declined to find liabilitywhere alternative channels of distribution are available to thecompetitor, even if those channels are not as efficient orreliable as the channels foreclosed by the defendant. In OmegaEnvironmental, Inc. v. Gilbarco, Inc., 127 F.3d 1157 (9th Cir.1997), for example, the Ninth Circuit found that a manufacturer ofpetroleum dispensing equipment "foreclosed roughly 38% of therelevant market for sales." 127 F.3d at 1162. Nonetheless, theCourt refused to find the defendant liable for exclusive dealingbecause "potential alternative sources of distribution" existedfor its competitors. Id. at 1163. Rejecting plaintiff's argument(similar to the one made in this case) that these alternativeswere "inadequate substitutes for the existing distributors," theCourt stated that "[c]ompetitors are free to sell directly, todevelop alternative distributors, or to compete for the servicesof existing distributors. Antitrust laws require no more." Id.;accord Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555,1572-73 (11th Cir. 1991).
III. THE STATE LAW CLAIMS
In their amended complaint, the plaintiff states assert that thesame facts establishing liability under §§ 1 and 2 of the ShermanAct mandate a finding of liability under analogous provisions intheir own laws. The Court agrees. The facts proving that Microsoftunlawfully maintained its monopoly power in violation of § 2 ofthe Sherman Act are sufficient to meet analogous elements ofcauses of action arising under the laws of each plaintiffstate.7 The Court reaches the same conclusion with respect tothe facts establishing that Microsoft attempted to monopolize thebrowser market in violation of § 2,8 and with respect to thosefacts establishing that Microsoft instituted an improper tyingarrangement in violation of § 1.9
The plaintiff states concede that their laws do not condemn anyact proved in this case that fails to warrant liability under theSherman Act. States' Reply in Support of their ProposedConclusions of Law at 1. Accordingly, the Court concludes that,for reasons identical to those stated in § II.B, supra, theevidence in this record does not warrant finding Microsoft liablefor exclusive dealing under the laws of any of the plaintiffstates.
Microsoft contends that a plaintiff cannot succeed in an antitrustclaim under the laws of California, Louisiana, Maryland, New York,Ohio, or Wisconsin without proving an element that is not requiredunder the Sherman Act, namely, intrastate impact. Assuming thateach of those states has, indeed, expressly limited theapplication of its antitrust laws to activity that has asignificant, adverse effect on competition within the state or isotherwise contrary to state interests, that element is manifestlyproven by the facts presented here. The Court has found thatMicrosoft is the leading supplier of operating systems for PCs andthat it transacts business in all fifty of the United States.Findings ¶ 9.10 It is common and universal knowledge thatmillions of citizens of, and hundreds, if not thousands, ofenterprises in each of the United States and the District ofColumbia utilize PCs running on Microsoft software. It is equallyclear that certain companies that have been adversely affected byMicrosoft's anticompetitive campaign — a list that includes IBM,Hewlett-Packard, Intel, Netscape, Sun, and many others — transactbusiness in, and employ citizens of, each of the plaintiff states.These facts compel the conclusion that, in each of the plaintiffstates, Microsoft's anticompetitive conduct has significantlyhampered competition.
Microsoft once again invokes the federal Copyright Act indefending against state claims seeking to vindicate the rights ofOEMs and others to make certain modifications to Windows 95 andWindows 98. The Court concludes that these claims do not encroachon Microsoft's federally protected copyrights and, thus, that theyare not pre-empted under the Supremacy Clause. The Court alreadyconcluded in § I.A.2.a.i, supra, that Microsoft's decision tobundle its browser and impose first-boot and start-up screenrestrictions constitute independent violations of § 2 of theSherman Act. It follows as a matter of course that the sameactions merit liability under the plaintiff states' antitrust andunfair competition laws. Indeed, the parties agree that thestandards for liability under the several plaintiff states'antitrust and unfair competition laws are, for the purposes ofthis case, identical to those expressed in the federal statute.States' Reply in Support of their Proposed Conclusions of Law at1; Microsoft's Sur-Reply in Response to the States' Reply at 2n. 1. Thus, these state laws cannot "stand as an obstacle to" thegoals of the federal copyright law to any greater extent than dothe federal antitrust laws, for they target exactly the same typeof anticompetitive behavior. Hines v. Davidowitz, 312 U.S. 52, 67(1941). The Copyright Act's own preemption clause provides that"[n]othing in this title annuls or limits any rights or remediesunder the common law or statutes of any State with respectto . . . activities violating legal or equitable rights that are notequivalent to any of the exclusive rights within the general scopeof copyright as specified by section 106. . . ."17 U.S.C. § 301(b)(3). Moreover, the Supreme Court has recognized that thereis "nothing either in the language of the copyright laws or in thehistory of their enactment to indicate any congressional purposeto deprive the states, either in whole or in part, of theirlong-recognized power to regulate combinations in restraint oftrade." Watson v. Buck, 313 U.S. 387, 404(1941). See also Allied Artists Pictures Corp. v. Rhodes,496 F. Supp. 408, 445 (S.D.Ohio 1980), aff'd in relevantpart, 679 F.2d 656 (6th Cir. 1982) (drawing upon similaritiesbetween federal and state antitrust laws in support of notionthat authority of states to regulate market practices dealingwith copyrighted subject matter is well-established); cf. Hines,312 U.S. at 67 (holding state laws preempted when they "standas an obstacle to the accomplishment and execution of the fullpurposes and objectives of Congress").
The Court turns finally to the counterclaim that Microsoft bringsagainst the attorneys general of the plaintiff states under42 U.S.C. § 1983. In support of its claim, Microsoft argues that theattorneys general are seeking relief on the basis of state laws,repeats its assertion that the imposition of this relief woulddeprive it of rights granted to it by the Copyright Act, andconcludes with the contention that the attorneys general are,"under color of" state law, seeking to deprive Microsoft of rightssecured by federal law — a classic violation of 42 U.S.C. § 1983.
Having already addressed the issue of whether granting the reliefsought by the attorneys general would entail conflict with theCopyright Act, the Court rejects Microsoft's counterclaim on yetmore fundamental grounds as well: It is inconceivable that theirresort to this Court could represent an effort on the part of theattorneys general to deprive Microsoft of rights guaranteed itunder federal law, because this Court does not possess the powerto act in contravention of federal law. Therefore, since theconduct it complains of is the pursuit of relief in federal court,Microsoft fails to state a claim under 42 U.S.C. § 1983.Consequently, Microsoft's request for a declaratory judgmentagainst the states under 28 U.S.C. § 2201 and 2202 is denied, andthe counterclaim is dismissed.
In accordance with the Conclusions of Law filed herein this date,it is, this ______ day of April, 2000,
ORDERED, ADJUDGED, and DECLARED, that Microsoft has violated §§ 1and 2 of the Sherman Act, 15 U.S.C. § 1, 2, as well as thefollowing state law provisions: Cal Bus. & Prof. Code §§ 16720,16726, 17200; Conn. Gen. Stat. §§ 35-26, 35-27, 35-29; D.C. Code§§ 28-4502, 28-4503; Fla. Stat. chs. 501.204(1), 542.18, 542.19;740 Ill. Comp. Stat. ch. 10/3; Iowa Code §§ 553.4, 553.5; Kan.Stat. §§ 50-101 et seq.; Ky. Rev. Stat. §§ 367.170, 367.175; La.Rev. Stat. §§ 51:122, 51:123, 51:1405; Md. Com. Law II Code Ann. §11-204; Mass. Gen. Laws ch. 93A, § 2; Mich. Comp. Laws §§ 445.772,445.773; Minn. Stat. § 325D.52; N.M. Stat. §§ 57-1-1, 57-1-2; N YGen. Bus. Law § 340; N.C. Gen. Stat. §§ 75-1.1, 75-2.1; Ohio Rev.Code §§ 1331.01, 1331.02; Utah Code § 76-10-914; W.Va. Code §§47-18-3, 47-18-4; Wis. Stat. § 133.03(1)-(2); and it is
FURTHER ORDERED, that judgment is entered for the United States onits second, third, and fourth claims for relief in Civil ActionNo. 98-1232; and it is
FURTHER ORDERED, that the first claim for relief in Civil ActionNo. 98-1232 is dismissed with prejudice; and it is
FURTHER ORDERED, that judgment is entered for the plaintiff stateson their first, second, fourth, sixth, seventh, eighth, ninth,tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth,sixteenth, seventeenth, eighteenth, nineteenth, twentieth,twenty-first, twenty-second, twenty-fourth, twenty-fifth, andtwenty-sixth claims for relief in Civil Action No. 98-1233; and itis
FURTHER ORDERED, that the fifth claim for relief in Civil ActionNo. 98-1233 is dismissed with prejudice; and it is
FURTHER ORDERED, that Microsoft's first and second claims forrelief in Civil Action No. 98-1233 are dismissed with prejudice;and it is
FURTHER ORDERED, that the Court shall, in accordance with theConclusions of Law filed herein, enter an Order with respect toappropriate relief, including an award of costs and fees,following proceedings to be established by further Order of theCourt.
Thomas Penfield JacksonU.S. District Judge
1. Proof that the defendant's conduct was motivated by a desire toprevent other firms from competing on the merits can contribute toa finding that the conduct has had, or will have, the intended,exclusionary effect. See United States v. United States GypsumCo., 438 U.S. 422, 436 n. 13 (1978) ("consideration of intent mayplay an important role in divining the actual nature and effect ofthe alleged anticompetitive conduct").
2. While Microsoft is correct that some courts have alsorecognized the right of a copyright holder to preserve the"integrity" of artistic works in addition to those rightsenumerated in the Copyright Act, the Court nevertheless concludesthat those cases, being actions for infringement without antitrustimplications, are inapposite to the one currently before it. See,e.g., WGN Continental Broadcasting Co. v. United Video, Inc.,693 F.2d 622 (7th Cir. 1982); Gilliam v. ABC, Inc., 538 F.2d 14 (2dCir. 1976).
3. Microsoft contends that Windows and Internet Explorer representa single "integrated product," and that the relevant market is aunitary market of "platforms for software applications."Microsoft's Proposed Conclusions of Law at 49 n. 28.
4. In Microsoft II the D.C. Circuit acknowledged it was withoutbenefit of a complete factual record which might alter itsconclusion that the "Windows 95/IE package is a genuineintegration." 147 F.3d at 952.
5. Most of the quantitative evidence was presented in units otherthan monetary, but numbered the units in millions, whatever theirnature.
6. Amicus curiae Lawrence Lessig has suggested that a corollaryconcept relating to the bundling of "partial substitutes" in thecontext of software design may be apposite as a limiting principlefor courts called upon to assess the compliance of these productswith antitrust law. This Court has been at pains to point out thatthe true source of the threat posed to the competitive process byMicrosoft's bundling decisions stems from the fact that acompetitor to the tied product bore the potential, but had not yetmatured sufficiently, to open up the tying product market tocompetition. Under these conditions, the anticompetitive harm froma software bundle is much more substantial and pernicious than thetypical tie. See X Phillip E. Areeda, Einer Elhauge & HerbertHovenkamp, Antitrust Law ¶ 1747 (1996). A company able to leverageits substantial power in the tying product market in order toforce consumers to accept a tie of partial substitutes is thusable to spread inefficiency from one market to the next, id. at232, and thereby "sabotage a nascent technology that might competewith the tying product but for its foreclosure from the market."III Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1746.1dat 495 (Supp. 1999).
7. See Cal. Bus. & Prof. Code §§ 16720, 16726, 17200 (West 1999);Conn. Gen. Stat. § 35-27 (1999); D.C. Code § 28-4503 (1996); Fla.Stat. chs. 501.204(1), 542.19 (1999); 740 Ill. Comp. Stat. 10/3(West 1999); Iowa Code § 553.5 (1997); Kan. Stat. §§ 50-101 etseq. (1994); Ky. Rev. Stat. §§ 367.170, 367.175 (Michie 1996); La.Rev. Stat. §§ 51:123, 51:1405 (West 1986); Md. Com. Law II CodeAnn. § 11-204 (1990); Mass. Gen. Laws ch. 93A, § 2; Mich. Comp.Laws § 445.773 (1989); Minn. Stat. § 325D.52 (1998); N.M. Stat. §57-1-2 (Michie 1995); N.Y. Gen. Bus. Law § 340 (McKinney 1998);N.C. Gen. Stat. §§ 75-1.-1.1, 75-2.1 (1999); Ohio Rev. Code §§1331.01, 1331.02 (Anderson 1993); Utah Code § 76-10-914 (1999);W.Va. Code § 47-18-4 (1999); Wis. Stat. § 133.03(2) (West 1989 &Supp. 1998).
8. See Cal. Bus. & Prof. Code § 17200 (West 1999); Conn. Gen.Stat. § 35-27 (1999); D.C. Code § 28-4503 (1996); Fla. Stat. chs.501.204(1), 542.19 (1999); 740 Ill. Comp. Stat. 10/3(3) (West1999); Iowa Code § 553.5 (1997); Kan. Stat. §§ 50-101 et seq.(1994); Ky. Rev. Stat. §§ 367.170, 367.175 (Michie 1996); La. Rev.Stat. §§ 51:123, 51:1405 (West 1986); Md. Com. Law II Code Ann. §11-204(a)(2) (1990); Mass. Gen. Laws ch. 93A, § 2; Mich. Comp.Laws § 445.773 (1989); Minn. Stat. § 325D.52 (1998); N.M. Stat. §57-1-2 (Michie 1995); N.Y. Gen. Bus. Law § 340 (McKinney 1988);N.C. Gen. Stat. §§ 75-1.1, 75-2.1 (1999); Ohio Rev. Code §§1331.01, 1331.02 (Anderson 1993); Utah Code § 76-10-914 (1999);W.Va. Code § 47-18-4 (1999); Wis. Stat. § 133.03(2) (West 1989 &Supp. 1998).
9. See Cal. Bus. & Prof. Code §§ 16727, 17200 (West 1999); Conn.Gen. Stat. §§ 35-26, 35-29 (1999); D.C. Code § 28-4502 (1996);Fla. Stat. chs. 501.204(1), 542.18 (1999); 740 Ill. Comp. Stat.10/3(4) (West 1999); Iowa Code § 553.4 (1997); Kan. Stat. §§50-101 et seq. (1994); Ky. Rev. Stat. §§ 367.170, 367.175 (Michie1996); La. Rev. Stat. §§ 51:122, 51:1405 (West 1986); Md. Com. LawII Code Ann. § 11-204(a)(1) (1990); Mass. Gen. Laws ch. 93A, § 2;Mich. Comp. Laws § 445.772 (1989); Minn. Stat. § 325D.52 (1998);N.M. Stat. § 57-1-1 (Michie 1995); N.Y. Gen. Bus. Law § 340(McKinney 1988); N.C. Gen. Stat. §§ 75-1.1, 75-2.1 (1999); OhioRev. Code §§ 1331.01, 1331.02 (Anderson 1993); Utah Code §76-10-914 (1999); W.Va. Code § 47-18-3 (1999); Wis. Stat. §133.03(1) (West 1989 & Supp. 1998).
10. The omission of the District of Columbia from this finding wasan oversight on the part of the Court; Microsoft obviouslyconducts business in the District of Columbia as well.