Microsoft has built an operating system that has improved dramatically over the years, but has always been surrounded by controversy. More transparency, better monitoring, and more awareness about the expectations of the customers would all serve to make the operating system better and remove the glitches, as has been done over various versions.

The cloud has almost lifted, and the biggest software company could come out more unscathed than it ever dared to hope. However, this is what enraged the critics who called the 21-page agreement full of loopholes. One example bandied about was a clause that permits Microsoft to ask consumers whether they want to restore, after 14 days, any changes made to Windows by computer makers. The agreement also allowed Microsoft to maintain the secrecy of any technical details of its anti-piracy, security, anti-virus or encryption technology.

Now it’s up to the Judge Kollar-Kotelly to chart out the course the case will take, though it will be a long time before it is resolved, perhaps over a year, if all goes well.

Microsoft has been facing an antitrust enquiry in the USA for more than a decade now. It was on May 30, 1990, that the US Federal Trade Commission opened the antitrust investigation. This followed complaints to the agency that charged that the company’s pricing policies illegally thwarted competition and that it deliberately created hidden codes in its operating system to hinder competing applications.

Of course, these charges were brought out by competitors who alleged that Microsoft had unfairly bundled its Internet Explorer (IE) software with its operating system in order to thwart competition (Netscape) and threatened to withhold Windows from hardware manufacturers or forced them to agree to exclusive contracts that shut out Netscape, thereby further enhancing its monopoly. Under the American law, it is not illegal to be a monopoly, but a corporation violates the 1890 Sherman Act, which seeks to curb monopolistic conduct among US corporations, if it abuses the monopoly.

The US Justice Department and 19 states in the USA agreed with this contention. They filed antitrust charges against Microsoft in May, 1998. After 76 days of trial and some later proceedings, US District Judge Thomas Penfield Jackson ruled on April, 2000, that Microsoft was monopolistic and had violated two sections of the Sherman Act.

The judge later ordered that Microsoft be broken into two and restricted the company’s business conduct, withholding technology that would let software makers create products that work smoothly with the operating system or taking actions that knowingly interfere with the performance of the competitor’s products etc. He later stayed both orders pending appeal.

An appeals court in June took back the break-up order, but in remanding the case to a lower court, upheld the monopoly ruling and ordered that new remedies be set in keeping with that ruling. In August, Judge Kollar-Kotelly was randomly assigned to the case.

The beginnings of what was being branded as a monopolistic enterprise go back to 1981 when Microsoft introduced MS-DOS (Microsoft Disk Operating System). It became a standard for the IBM-based personal computers and the launching pad for Micro-soft, as the company was known then.

While DOS worked fairly well, the main grouse that users had was that it was complicated. This was in contrast to the Apple operating system, which used the GUI (Graphic User Interface) to simplify the operating system’s use. Microsoft addressed the problem in 1983 when it unveiled its GUI Windows interface. This was shipped two years later, and there have been many improved versions to the basic Windows system.

IBM-compatible computers dominated the personal computer market and Microsoft was the biggest gainer, since it supplied the operating system to all such hardware vendors—IBM as well as its competitors. This enabled the company to play a very significant role in the emerging computer market and given the growing numbers that Microsoft operating systems represented, developers flocked to the Windows platform, further strengthening its hold.

At some point, the US government and competitors alleged, Microsoft started abusing its near monopolistic (over 80 per cent of the operating systems used in personal computers the world over are by Microsoft) position in the operating system market to restrict competition.

To cite some examples, discussed recently, it licensed its operating system more cheaply to computer makers such as Dell and Compaq, if they exclusively installed its software. At the same time, it turned on the company that started it all – IBM. When IBM refused to drop sales of its own rival operating system and software packages, it was not given certain important details of Windows ’95 until 15 minutes before it was launched, while other hardware manufacturers already had computers installed with it. IBM lost millions of dollars in sales because of this action.

A key issue was the way in which Microsoft pushed its browser, the Internet Explorer, in a market that had been dominated by Netscape’s Navigator. It not only gave away the Explorer free, when Netscape was being sold, it also "bundled" it into Windows, making manufacturers pre-load it on to their computers.

Even if users wanted to use Navigator instead, it was shown at the trial that its performance was not as quick. In a short time, Microsoft won over half the browser market, which it proceeded to dominate thereafter.

Sun Microsystems, a bitter Microsoft rival, contended that Microsoft introduced a modified version of the Java computer language, which runs only on Windows. This violated the very basis of Java’s creation – it had been designed to run on all operating systems.

For its part, Microsoft contended that consumers had gained from its actions. For example, while Netscape charged money, Internet Explorer was free, and soon Netscape also became free. It also said the competitors were also doing well and thus were not being thwarted.

The defence did not convince Judge Jackson and he came down harshly on the company.

Microsoft went on to appeal and won significant concessions.

While Microsoft tackles its American legal travails, trouble is also likely on the European front where authorities said in August that it might have violated their antitrust rules by using illegal practices to extend its dominant position in the market for personal computer operating systems sector into the market for low-end server operating systems that are used by corporate departments or small businesses to connect PCs with shared printers, shared files and Web servers.

In 1994, the European Commission and the US Justice Department had jointly forced Microsoft to abandon its licensing agreements with personal computer makers that had forced them to pay a royalty on every PC, whether or not it had Microsoft software preinstalled. It remains to be seen how much bearing the latest case in the USA will have on Europe.

Whether it is the US regulators or their European counterparts, Microsoft is under pressure. It is obvious that the company has become much more aware of consumer concerns and is making efforts to address issues. One thing is quite clear— all investigations and the pressure have served a purpose by making the consumer more aware as well as in protecting him from abuse. Customer is king, still, it would seem.