While Ballmer is correct that no court ever said the browser bundling failed the rule-of-reason test, it must be noted that no court has ever had the opportunity to weigh the issue. In dismissing the original verdict against Microsoft, the US Court of Appeals ruled that the lower court had misjudged antitrust law, and that the so-called rule of reason should be applied to Microsoft's efforts to bundle the browser with Windows.
However, the Department of Justice soon afterward dropped the portion of the case dealing with "tying" the browser. Thus, that test of reason was never applied in the courtroom.
Adding features, building 'moats'
In a 1997 email to investor Warren Buffett, senior Microsoft executive Jeff Raikes summarised the company's strategy in simple terms. The operating system is the core business, and others are "moats" that protect it, he wrote. The Office software, the Web businesses, and other feature additions served as layers of protection for the company's core product, as well as potential profit centres, he said.
"If we own the key 'franchises' built on top of the operating system, we dramatically widen the 'moat' that protects the operating system business," Raikes wrote. "If I owned the most successful daily newspaper in Buffalo, I wouldn't want to leave it to my competitor to own the Sunday edition."
Microsoft's recent statements have made it clear that it is set on continuing to widen those moats via other features and businesses, despite the growing pressure of fines and judgments. Here are a few examples of what Microsoft now refers to as "integrated innovation" that could become fodder for future court skirmishes:
Talkback
A plea for relief from Microsoft's escalating anti-competitive tactics.
http://itheresies.blogspot.com/2004_03_01_itheresies_archive.html
An open letter to antitrust, competition, consumer and trade practice monitoring agency officials worldwide.