Petition to find Microsoft in Civil Contempt

In October 1997, the Department of Justice (DOJ) filed a petition to find Microsoft Corporation (Microsoft) in civil contempt of court for violating the 1994 Consent Decree by requiring Original Equipment Managers (OEM) to license Internet Explorer (I.E.) when they license any Microsoft Operating System (OS).  The DOJ first demonstrates that Microsoft has a monopoly in the OS market which they could potentially exploit.  They then explain the emergence of the Internet and the World Wide Web, and Microsoft's response to enter into competition in this market as well.  The DOJ then demonstrates that Microsoft is in contempt of the Consent Decree first by giving the legal standard for finding someone in contempt of a Court Order or Decree, second by showing that the plain language of the Consent Decree prohibits licensing I.E. as a condition for licensing an OS, and third by demonstrating that Microsoft violates this plain language.  The DOJ then states that Microsoft's I.E. licensing practices are a clear example of the type of anti-competitive practices the DOJ was trying to prevent by drafting the Consent Decree of 1994.  Finally, the DOJ argues that Microsoft's Non-Disclosure Agreements (NDA) are overly broad, hindering the Court's ability to effectively monitor Microsoft's practices.

 Actual Text of the DOJ's Petition
 Actual Text of the DOJ's Memorandum in Support of the Petition
 (more thorough explanation of the DOJ's case)

Microsoft's monopoly and the Internet

Most OEMs sell computers to consumers with an OS pre-installed.  Microsoft estimated that between 1996 and 1997, 80% of all OSs installed by OEMs in the US were Microsoft's.  The DOJ claims that with this type of power in the OS market, Microsoft can promote other software products through license agreements which force OEMs to include these products with the OS.  This is exactly the type of arrangement the 1994 Consent Decree sought to prohibit.  With the introduction of the Internet, Microsoft faced a new challenge to their stronghold in the OS market.  Browsers and other Internet technologies such as the Java Virtual Machine provide many of the same functions as an OS, and run on any number of platforms, thus reducing the importance of buying a particular OS.  Microsoft has developed a top selling Browser which is in fierce competition with Netscape, a rival Browser.  Microsoft must win this competition in order to maintain a powerful position in the OS market.  This competition is fair and valuable to consumers as long as Microsoft does not leverage its existing monopoly power to gain an unfair advantage.

Microsoft is in Contempt of the Consent Decree

To prove that Microsoft is indeed in Contempt of Court, the DOJ must prove that there was in fact a Court Order or Decree which both parties acknowledged and which the defendant clearly violated.  The DOJ provides evidence that the Consent Decree does fall under these standards as a contract which both parties acknowledged.

Next the DOJ claims that the "Plain Language" of Section IV(E)(i) of the Consent Decree clearly prohibits conditioning the license of an OS on the license of I.E..

Finally, the DOJ claims that Microsoft has violated the "Plain Language" of the Consent Decree by claiming that

  1.  Microsoft has entered into Windows 95 License Agreements with OEMs;
  2.  The terms of these License Agreements are expressly or impliedly conditioned upon OEMs licensing Internet Explorer; and
  3.  Internet Explorer is an "other product" from Windows 95, and not part of an "integrated product" within the meaning of the Final Judgment. (DOJ Mem.)
The first two of these claims are fairly clearly substantiated in the Memorandum and remain undisputed by Microsoft.  The DOJ claims that I.E. is a separate product from Windows 95 by demonstrating that there is a separate demand for I.E. as a stand alone product, Microsoft develops and distributes I.E. for other OSs, and Microsoft considers I.E. as a separate product, competing against Netscape in a separate browser "space" or "market".  They claim that I.E. is commercially separable for these reasons, and also that I.E. is physically separable in that one can remove the I.E. icon from the desktop without damaging the rest of the OS.

Non-Disclosure Agreements

The DOJ's final complaint against Microsoft is that their Non-Disclosure Agreements (NDA) are overly broad.  Because of this breadth, the DOJ believes that interested parties will be less likely to communicate complaints about Microsoft fearing that Microsoft's interpretation of the NDA will change such that they are in violation of it.  The DOJ worries that this will restrict their ability to keep track of Microsoft to insure they are not in violation of the Consent Decree.