Precluding Preferential Deals and Coercion: Microsoft would be enjoined from coercing software vendors or computer assemblers into accepting business relationships preferentially favorable to Microsoft and from offering operating system price discounts conditioned on terms preferentially favorable to other Microsoft products or services.
All of these remedies would require the court or some other agency to monitor Microsoft’s conduct continuously—a task that proved to be difficult under the 1994 consent decree accepted by Microsoft. Some structural remedy proposals offered the possibility of less invasive and persistent post-decree monitoring. The leading structural alternatives included:
Vertical Divestiture: Microsoft would be broken into at least two and possibly more separate companies, from all but one of which Bill Gates and his fellow founders would be required to divest their controlling common stock interests and directorships. One company would develop and sell operating systems; one or more others would develop and sell applications software. A divestiture of this sort would be similar to the separation in 1983 of seven regional telephone companies from the long-distance service and manufacturing operations retained by AT&T.
Horizontal Divestiture: Microsoft would be broken into three or more “Baby Bills,” each endowed initially with all of the software code for application programs and operating systems. Divestiture of controlling stock interests in all but one of the new companies would also be required. A problem in
For the exclusive use of Y. Gao, 2017.
This document is authorized for use only by Yuanyuan Gao in Industrial Organization II: Spring 2017 taught by Erich Muehlegger, University of California – Davis from April 2017 to June 2017.
Microsoft on Trial ___________________________________________________________ CR14-99-1522.0
implementing such a proposal is that most of Microsoft’s operations are concentrated at a single site in Redmond, Washington.
Open Access to Source Code: Microsoft would be required to publish openly all the source code (involving tens of millions of instruction lines) for its Windows operating systems, so that any software writer developing programs interfacing with Windows could know not only the external interface specifications but how they are supported internally. As with non-discriminatory release of APIs, frequent updates would be required, e.g., over the Internet. Microsoft would retain exclusive copyright to the published code. Open publication of software code is not uncommon; it was practiced, for example, by the sponsors of the Linux operating system and by Sun Microsystems with respect to Java.
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