1. On Microsoft's monopoly power in the market:

"Viewed together, three main facts indicate that Microsoft enjoys monopoly power.

First, Microsoft's share of the market for Intel-compatible PC operating systems is extremely large
and stable.

Second, Microsoft's dominant market share is protected by a high barrier to entry.

Third, and largely as a result of that barrier, Microsoft's customers lack a commercially viable
alternative to Windows. ...

2. On evidence of competitors' inability to compete:

IBM's inability to gain widespread developer support for its OS/2 Warp operating system
illustrates how the massive Windows installed base makes it prohibitively costly for a rival
operating system to attract enough developer support to challenge Windows. ..


The inability of Apple to compete effectively with Windows provides another example of the
applications barrier to entry in operation. Although Apple's Mac OS supports more than
12,000 applications, even an inventory of that magnitude is not sufficient to enable Apple to
present a significant percentage of users with a viable substitute for Windows."

3. On why Microsoft is a monopoly:

A Microsoft study from November 1997 reveals that the company could have charged $49 for
an upgrade to Windows 98 -- there is no reason to believe that the $49 price would have been
unprofitable -- but the study identifies $89 as the revenue-maximizing price. Microsoft thus
opted for the higher price. ...

The company's decision not to consider the prices of other vendors' Intel-compatible PC
operating systems when setting the price of Windows 98, for example, is probative of
monopoly power. One would expect a firm in a competitive market to pay much closer
attention to the prices charged by other firms in the market.

Furthermore, Microsoft expends a significant portion of its monopoly power, which could
otherwise be spent maximizing price, on imposing burdensome restrictions on its customers --
and in inducing them to behave in ways -- that augment and prolong that monopoly power. For
example, Microsoft attaches to a Windows license conditions that restrict the ability of (original
equipment manufacturers) to promote software that Microsoft believes could weaken the
applications barrier to entry. Microsoft also charges a lower price to OEMs who agree to ensure
Workstations.

4. On Microsoft's harm to consumers:

Microsoft's actions have inflicted collateral harm on consumers who have no interest in using
a Web browser at all. If these consumers want the non-browsing features available only in
Windows 98, they must content themselves with an operating system that runs more slowly
than if Microsoft had not interspersed browsing-specific routines throughout various files
containing routines relied upon by the operating system.

Microsoft has harmed even those consumers who desire to use Internet Explorer, and no other
browser, with Windows 98. To the extent that browsing-specific routines have been
commingled with operating system routines to a greater degree than is necessary to provide any
consumer benefit, Microsoft has unjustifiably jeopardized the stability and security of the
operating system. Specifically, it has increased the likelihood that a browser crash will cause
the entire system to crash and made it easier for malicious viruses that penetrate the system via
Internet Explorer to infect non-browsing parts of the system.

5. On Microsoft's bundling and other business practices:

Microsoft's argument that binding the browser to the operating system is reasonably
necessary to preserve the 'integrity" of the Windows platform is likewise specious. ...

In sum, Microsoft successfully secured for Internet Explorer -- and foreclosed to Navigator --
one of the two distribution channels that leads most efficiently to the usage of browsing
software.

Conclusion:

Most harmful of all is the message that Microsoft's actions have conveyed to every enterprise
with the potential to innovate in the computer industry. Through its conduct toward Netscape,
IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious
market power and immense profits to harm any firm that insists on pursuing initiatives that
could intensify competition against one of Microsoft's core products.

Microsoft's past success
in hurting such companies and stifling innovation deters investment in technologies and
businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some
innovations that would truly benefit consumers never occur for the sole reason that they do not
coincide with Microsoft's self-interest.