Did Microsoft's Antitrust Agreement Create a More Competitive Market?

By Beecher Tuttle May 12, 2011

The antitrust settlement agreement that Microsoft signed with the Department of Justice expires today, nearly nine years after it went into effect. But the question still remains, how much impact did the historic oversight have on the technology world?

The skirmish began more than a decade ago when the DOJ, the District of Columbia and 19 separate states sued Microsoft for a "broad pattern of anti-competitive conduct," including using its Windows OS monopoly to discourage PC makers from promoting Web browsers and middleware that would compete with Internet Explorer.

Following a few years in the courts, Microsoft agreed to sign a consent decree that barred it from penalizing PC makers when they included technology from other software browsers. The settlement also mandated that Microsoft disclose its middleware interfaces and other technical data to third party software developers, among other stipulations. Over the last nine years, Microsoft has had to demonstrate to the DOJ that it is no longer indulging in antitrust practices.

With that oversight period ending today, the DOJ has come out to take credit for the positive market changes that the ruling has prompted.

"Nearly every desktop middleware market, from web browsers to media players to instant messaging software, is more competitive today than it was when the final judgment was entered," the DOJ said in a statement. "In addition, the final judgment helped create competitive conditions that enabled new kinds of products, such as cloud computing services and mobile devices, to develop as potential platform threats to the Windows desktop operating system."

Most analysts agree that a competitive balance has been created, but not because of the consent decree. Yes, Internet Explorer is no longer as dominant as it used to be. IE's market share dropped from 95 percent in 2002, to just over 55 percent as of this April. However, the majority of analysts believe that the transition was due to sweeping market changes, not regulatory ones, says Jay Greene at CNET.

"It'd be wrong to suggest that the consent decree played a meaningful role in that shift," Greene writes. "The widespread adoption of broadband data connections meant users could download browser software quickly, rather than having to wait minutes or even hours to get something that competed with Internet Explorer."

Greene added that Microsoft's failure to innovate alongside Google and Mozilla also led to its slip in market share.

As for the PC OS market, the consent decree did little to change the playing field. Microsoft's Windows operating system accounted for 93 percent of the desktop market in 2002. The company's market share now stands at 91 percent, according to IDC.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jamie Epstein

TechZone360 Contributor

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