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Microsoft has been involved in numerous high-profile litigations over the history of the company, including cases against the United States, the European Union, and competitors.

Governmental[link]

In its 2008 annual report, Microsoft stated:^[1]

Anti-trust[link]

In the 1990s, Microsoft adopted exclusionary licensing under which PC manufacturers were required to pay for an MS-DOS license even when the system shipped with an alternative operating system. Critics attest that it also used predatory tactics to price its competitors out of the market and that Microsoft erected technical barriers to make it appear that competing products did not work on its operating system.^[2] In a consent decree filed on July 15, 1994, Microsoft agreed to a deal under which, among other things, the company would not make the sale of its operating systems conditional on the purchase of any other Microsoft product. On February 14, 1995 Judge Stanley Sporkin issued a 45-page opinion that the consent decree was not in the public interest. Later that spring, a three-judge federal appeals panel removed Sporkin and reassigned the consent decree. Judge Thomas Penfield Jackson entered the decree on August 21, 1995, three days before the launch of Windows 95.^[3]

A Microsoft purchase of Intuit was scuttled in 1994 due to antitrust concerns that Microsoft would be purchasing a major competitor.^[4]

After bundling the Internet Explorer web browser into its Windows operating system in the late 1990s (without requiring a separate purchase) and acquiring a dominant share in the web browser market, the antitrust case United States v. Microsoft was brought against the company. In a series of rulings by judge Thomas Penfield Jackson, the company was found to have violated its earlier consent decree and abused its monopoly in the desktop operating systems market. The "findings of fact" during the antitrust case established that Microsoft has a monopoly in the PC desktop operating systems market:^[5]

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. (III.34)

The findings of fact go on to explain the nature of the "barrier to entry":^[5]

The fact that there is a multitude of people using Windows makes the product more attractive to consumers. The large installed base... impels ISVs (independent software vendors) to write applications first and foremost to Windows, thereby ensuring a large body of applications from which consumers can choose. The large body of applications thus reinforces demand for Windows, augmenting Microsoft's dominant position and thereby perpetuating ISV incentives to write applications principally for Windows... The small or non-existent market share of an aspiring competitor makes it prohibitively expensive for the aspirant to develop its PC operating system into an acceptable substitute for Windows. (III.39–40)

The proposed remedy (dividing Microsoft into two companies) was overturned on appeal.^{[citation needed]} While new penalties were under consideration, the Clinton administration ended and the Bush administration took office. The new administration announced that in the interest of ending the case as quickly as possible, it would no longer seek to break the company up, and that it would stop investigating claims of illegal tying of products.^[6] Eighteen days later, Judge Kollar-Kotelly ordered the justice department and Microsoft to "engage in discussions seven days a week, 24 hours a day."^[7] The judge cited the events of September 11, 2001 in her direction to begin settlement talks but did not explain the linkage between the two.^[8][9][10] Attorney General Ashcroft, however, denied that the events of September 11 had any effect on the outcome.^[11] Microsoft subsequently reached a settlement with the Department of Justice and some of the states which brought suit against it.^{[citation needed]} Several^[quantify] class-action lawsuits filed after the conviction are still pending.^{[when?][citation needed]}

In early 2002, Microsoft proposed to settle the private lawsuits by donating $1 billion USD in money, software, services, and training, including Windows licenses and refurbished PCs, to about 12,500 underprivileged public schools. This was seen by the judge as a potential windfall for Microsoft, not only in educating schoolchildren on Microsoft solutions but also in flooding the market with Microsoft products. Among the protesters were Apple Inc. which feared further loss of its educational market share. The federal judge rejected the proposed settlement.^[12]

In 2003–2004, the European Commission investigated the bundling of Windows Media Player into Windows, a practice which rivals complained was destroying the market for their own products.^{[citation needed]} Negotiations between Microsoft and the Commission broke down in March 2004, and the company was subsequently handed down a record fine of €497 million ($666 million) for its breaches of EU competition law.^{[citation needed]} Separate investigations into alleged abuses of the server market were also ongoing at the same time.^{[citation needed]} On December 22, 2004, the European Court decided that the measures imposed on Microsoft by the European Commission would not be delayed, as was requested by Microsoft while waiting for the appeal.^{[citation needed]} Microsoft has since paid a €497 million fine, shipped versions of Windows without Windows Media Player, and licensed many of the protocols used in its products to developers in countries within the European Economic Area. However, the European Commission has charactized the much delayed protocol licensing as unreasonable, called Microsoft "non-compliant" and still violating antitrust law in 2007, and said that its RAND terms were above market prices; in addition, they said software patents covering the code "lack significant innovation", which Microsoft and the EC had agreed would determine licensing fees.^[13] Microsoft responded by saying, that other government agencies had found "considerable innovation".^[14][15] Microsoft appealed the facts and ruling to the European Court of First Instance with hearings in September 2006.

On September 17, 2007, the EU Court of First Instance rejected Microsoft's appeal.^[16]

The court affirmed the original contested finding:^[17]

21 In the contested decision, the Commission finds that Microsoft infringed Article 82 EC and Article 54 of the Agreement on the European Economic Area (EEA) by twice abusing a dominant position. 22 The Commission first identifies three separate worldwide product markets and considers that Microsoft had a dominant position on two of them. It then finds that Microsoft had engaged in two kinds of abusive conduct. As a result it imposes a fine and a number of remedies on Microsoft.

All elements of Microsoft's appeal were dismissed.^[18]

Microsoft accepted the judgment of the Court of First Instance and proceeded to make available interoperability information as originally required by the European Commission.

Microsoft also faced competition law in South Korea and was fined $32 million in December 2005 and ordered to unbundle instant messaging, Windows Media Player and Windows Media Service, or let competitors' products take their place.^[19] Microsoft noted in their October 2005 SEC filing that they may have to pull out of South Korea, although they later denied fulfilling such a plan.^[20] Microsoft's 2006 appeal was struck down; they have another appeal pending.

European antitrust regulators on February 27, 2008 fined Microsoft $1.3 billion for failing to comply with a 2004 judgment, that the company had abused its market dominance. The new fine by the European Commission was the largest it has ever imposed on an individual company, and brings the total in fines imposed on Microsoft to about $US 2.5 billion, at current exchange rates.

Microsoft had previously been fined after the commission determined in 2004 that the company had abused the dominance of its Windows operating system to gain unfair market advantage. The commission imposing the new fine said, that it was because the company had not met the prescribed remedies after the earlier judgment.^[21]

European Union[link]

The European Union Microsoft competition case is a case brought by the European Commission of the European Union (EU) against Microsoft for abuse of its dominant position in the market (according to competition law). It started as a complaint from Novell over Microsoft's licensing practices in 1993, and eventually resulted in the EU ordering Microsoft to divulge certain information about its server products and release a version of Microsoft Windows without Windows Media Player.

February 2008 fine[link]

This unreferenced section requires citations to ensure verifiability.

On February 27, 2008 the European Union (EU) competitions commission announced its decision to fine the Microsoft Corporation €899 million (US$1.35 billion), approximately 1/10 of the company's net yearly earnings, for failing to comply with the 2004 antitrust order.^[22]

The first decision in this antitrust case was given in 2004 citing that Microsoft withheld needed interoperability information from rival software companies which prevented them from making software compatible with Windows. The commission ordered Microsoft to provide this information. Microsoft agreed to this, providing the information for royalty fees of 6.85% of the licensee's revenues for the product on grounds of innovation (specifically, 3.87% for the patent license and of 2.98% for the information license). The EU found these royalty fees unreasonable and Microsoft was ordered to lower them. Microsoft complied with this, adjusting the royalty rates to 1.2% (changing the rates for the licenses to 0.7% and 0.5%, respectively) in the European Union, while keeping the rate the same for the rest of the world. The EU still saw this as an unreasonable rate, and Microsoft, two month after lowering the rates, reduced the rates yet again to a flat rate of €10000 or a royalty of 0.4% applicable worldwide. Microsoft's royalty rates, which were deemed unreasonable for the period of 15 months between June 21, 2006 and October 21, 2007 are the cause for the fine. So far, the EU has fined Microsoft €1.68 billion in 3 separate fines in this case. This fine will go towards the European Union annual budget.

The European Anti-trust commissioner Neelie Kroes stated that the fine was "reasonable and proportionate," as the figure could have gone up as high as €1.5 billion, the maximum that the EU commission can impose. She also said that it should act as "a signal to the outside world, and especially Microsoft, that they should stick to the rules" and that "Talk is cheap. Flouting the rules is expensive." Although she also expressed hope that "today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission."

It is not certain whether Microsoft will appeal this decision. A Microsoft spokesperson has stated that Microsoft will review this latest fine, citing that "The commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved."^{[citation needed]} Microsoft's General Counsel Brad Smith commented "It's clearly very important to us as a company that we comply with our obligations under European law. We will study this decision carefully, and if there are additional steps that we need to take in order to comply with it, we will take them." Microsoft had appealed against fines by the EU before, but all the charges were defeated. If Microsoft does not appeal the decision, the company will have 3 months (starting February 27) to pay the fine in full.

The decisions came after Microsoft announced they were disclosing 30,000 pages of previously secret software code last Thursday (February 21). The EU competition commissioner commented that this move "does not necessarily equal a change in business practice."

Spanish anti-trust investigation[link]

In September 2011, the competition commission in Spain began an investigation into Microsoft's licence agreements, which prevent the transfer of Microsoft software to third parties.^[23][24]

United States[link]

United States v. Microsoft, 87 F. Supp. 2d 30 (D.D.C. 2000) was a set of consolidated civil actions filed against Microsoft Corporation on May 18, 1998 by the United States Department of Justice (DOJ) and twenty U.S. states. Joel I. Klein was the lead prosecutor. The plaintiffs alleged that Microsoft abused monopoly power in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft's victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this unfairly restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft's conduct in forming restrictive licensing agreements with OEM computer manufacturers, and Microsoft's intent in its course of conduct.

Microsoft stated that the merging of Microsoft Windows and Internet Explorer was the result of innovation and competition, that the two were now the same product and were inextricably linked together and that consumers were now getting all the benefits of IE for free. Those who opposed Microsoft's position countered that the browser was still a distinct and separate product which did not need to be tied to the operating system, since a separate version of Internet Explorer was available for Mac OS. They also asserted that IE was not really free because its development and marketing costs may have kept the price of Windows higher than it might otherwise have been. The case was tried before U.S. District Court Judge Thomas Penfield Jackson. The DOJ was initially represented by David Boies.

Other[link]

In March 2004, during a consumer class-action lawsuit in Minnesota, internal documents subpoenaed from Microsoft revealed that the company had violated nondisclosure agreements seven years earlier in obtaining business plans from Go Corporation, using them to develop and announce a competing product named PenWindows, and convincing Intel to reduce its investment in Go. After Go was purchased by AT&T and Go's tablet-based computing efforts were shelved, PenWindows development was dropped.^[25]

In May 2004, a class-action lawsuit accused Microsoft of overcharging customers in the state of California. The company settled the case for $1.1 billion, and a California court ordered Microsoft to pay an additional $258 million in legal fees (including over $3,000 per hour for the lead attorney in the case, more than $2,000 per hour for colleagues, and in excess of $1,000 per hour for administrative work). A Microsoft attorney responded, "Somebody ends up paying for this. These large fee awards get passed on to consumers."^[26] The total bill for legal fees was later reduced to just over $112 million.^[27] Because of the structure of the settlement, the law firm which sued Microsoft could end up getting more money from the company than California consumers and schools, the beneficiaries of the settlement.

In 2006 Microsoft initiated an investigation of Lithuanian government institutions for determining whether they choose long-term strategies of the software they use correctly. The investigation, funded by Microsoft itself, will be performed by the Vilnius University together with the Lithuanian Institution of the Free Market, a think tank organization. The investigation was initialised after the government started to prepare 860 thousand litas project to encourage the use of open-source software. The vice-president of Microsoft, Vahe Torossian, stated that "the government should not be technologically subjectivist"^[28]

Microsoft was sued for the "Windows Vista Capable" logo^[29][30] and in Iowa.^{[31][32][33][34]} Microsoft Word was also a subject of court case.^[35]

Private[link]

Microsoft has also fought numerous legal battles against private companies. The most prominent ones are against:

• Alcatel-Lucent, which won US$1.52 billion in a lawsuit which alleged that Microsoft had infringed its patents on playback of audio files. This ruling was overturned in a higher court^[36]
• Apple Inc. (known as Apple Computer, Inc. at the time), which accused Microsoft in the late 1980s of copying the "look and feel" of the graphical user interface of Apple's operating systems. The courts ruled in favor of Microsoft in 1994. Another suit by Apple accused Microsoft, along with Intel and the San Francisco Canyon Company, in 1995 of knowingly stealing several thousand lines of QuickTime source code in an effort to improve the performance of Video for Windows.^{[37][38][39][40]} After a threat to withdraw support for Office for Mac,^[41][42] this lawsuit was ultimately settled in 1997. Apple agreed to make Internet Explorer the default browser over Netscape, and Microsoft agreed to continue developing Office and other software for the Mac for the next 5 years, purchase $150 million of non-voting Apple stock, and made a quiet payoff estimated to be in the US$500 million-$2 billion range.^{[43][44][45][46]}
• AOL, on behalf of its Netscape division.^[47] Netscape (as an independent company) also was involved in the United States v. Microsoft antitrust suit.
• Be Inc., which accused Microsoft of exclusionary and anticompetitive behavior intended to drive Be out of the market. Be even offered to license its Be Operating System (BeOS) for free to any PC vendors who would ship it pre-installed, but the vendors declined due to what Be believes were fears of pricing retaliation from Microsoft: by raising the price of Microsoft Windows for one particular PC vendor, Microsoft could price that vendor's PCs out of the market.^[48]
• Bristol Technology Inc., which accused Microsoft illegally withheld Windows source code and used its dominant position with Windows to move into other markets.^[49][50][51] A ruling later ordered Microsoft to pay $1 Million to Bristol Technologies^[52] (see also Windows Interface Source Environment).
• Caldera, which accused Microsoft of having modified Windows 3.1 so that it would not run on DR DOS 6 although there was no technical reason for it not to work.^[53] Some claim that Microsoft put encrypted code in five otherwise unrelated Microsoft programs in order to prevent the functioning of DR DOS in pre-releases (beta versions) of Windows 3.1.^[54] Microsoft settled out-of-court for an undisclosed sum.
• Opera, which accused Microsoft of intentionally making its MSN service incompatible with the Opera browser on several occasions.
• Sendo, which accused Microsoft of terminating their partnership so it could steal Sendo's technology to use in Windows Smartphone 2002.^[55]
• Spyglass, which licensed its browser to Microsoft in return for a percentage of each sale; Microsoft turned the browser into Internet Explorer and bundled it with Windows, giving it away to gain market share but effectively destroying any chance of Spyglass making money from the deal they had signed with Microsoft; Spyglass sued for deception and won a $8 million settlement.^[56]
• Stac Electronics, which accused Microsoft of stealing its data compression code and using it in MS-DOS 6.^[57] Microsoft eventually lost the subsequent lawsuit and was ordered by a federal court to pay roughly $120 million in compensation.^[58]
• Sun Microsystems, which held Microsoft in violation of contract for including a modified version of Java in Microsoft Windows that provided Windows-specific extensions to Sun's Java language; Microsoft lost this decision in court and were forced to stop shipping their Windows-specific Java Virtual Machine. Microsoft eventually ceased to include any Java Virtual Machine in Windows, and Windows users who require a Java Virtual Machine need to download the software or otherwise acquire a copy from a source other than Microsoft.
• WordPerfect
• Zhongyi Electronic, which, having licensed two self-designed fonts to Microsoft for use only in Windows 95, filed suit in China in April, 2007, accusing Microsoft of using those fonts in subsequent Windows 98, 2000, XP, 2003 and four other Chinese-language Windows operating systems. Beijing's No. 1 Intermediate People's Court ruled on November 16, 2009 that Microsoft violated the scope of licensing agreements between the two companies. The result of the verdict is that Microsoft has to stop selling Chinese-language versions of the aforementioned operating systems.^[59][60] Microsoft said it will appeal.^[61] One of the fonts in question may be SimSun.^[62]
• Many other smaller companies have filed patent abuse and predatory practice suits against Microsoft.

Patents[link]

Alcatel-Lucent[link]

The dispute between Microsoft and Lucent (and later Alcatel-Lucent) began in 2003 when Lucent Technologies (acquired by Alcatel in 2006) filed suit against Gateway in the U.S. District Court for the Southern District of California in San Diego. Lucent also sued Dell in the U.S. District Court for the Eastern District of Virginia; soon thereafter, that court transferred the Dell case to San Diego, where it was consolidated with the case against Gateway. Lucent claimed in this first San Diego case that Dell and Gateway had violated patents on MP3-related technologies developed by Bell Labs, a division of predecessor company American Telephone & Telegraph. Other patents said to be infringed relate to MPEG video technology, speech technology, internet technology, and other technologies. Microsoft intervened in the lawsuit in April 2003 and Alcatel was added after it acquired Lucent.^[63]

After the first San Diego lawsuit was filed, Microsoft and Lucent have filed additional patent lawsuits against each other. In February 2007, Microsoft filed a lawsuit at the International Trade Commission claiming that Alcatel-Lucent infringed its patents.^[64] There is a second case in San Diego where Microsoft is asserting that Alcatel-Lucent infringes 10 of its patents, and yet another case in Texas where each alleges that the other is infringing its patents.^[65]

Burst.com[link]

• Burst.com claims that Microsoft stole Burst's patented technology for delivering high speed streaming sound and video content on the internet. Also at issue in the case is a 35-week period of missing emails in the evidence Microsoft handed over to Burst which was discovered by Burst.com's lawyers. Burst accuses Microsoft of crafting a 30 day email deletion policy specifically to cover up illegal activity. Microsoft settled with the company for $60 million in exchange for an agreement to license some of the company's technologies.^[66][67][68]

Eolas[link]

• Eolas and University of California, which accused Microsoft of using some of its software patents in their web browser, won $521 million in court.^[69]

Copyrights[link]

Apple[link]

Apple Computer Inc. v. Microsoft Corporation, 35 F.3d 1435 (9th Cir. 1994) was a copyright infringement lawsuit in which Apple Computer, Inc. (now Apple Inc.) sought to prevent Microsoft Corporation and Hewlett-Packard from using visual graphical user interface (GUI) elements that were similar to those in Apple's Lisa and Macintosh operating systems. Some critics claimed that Apple was really attempting to gain all intellectual property rights over the desktop metaphor for computer interfaces, and perhaps all GUIs, on personal computers. Apple lost all claims in the lawsuit, except that the court ruled that the "trash can" icon and file folder icons from Hewlett-Packard's now-forgotten NewWave windows application were infringing. The lawsuit was filed in 1988 and lasted four years; the decision was affirmed on appeal in 1994,^[70] and Apple's appeal to the U.S. Supreme Court was denied.

Trademarks[link]

Lindows[link]

Microsoft v. Lindows.com, Inc. was a court case brought by Microsoft against Lindows, Inc, claiming that the name "Lindows" was a violation of its trademark "Windows." In addition to the United States, Microsoft has also sued Lindows in Sweden, France, Belgium, Luxembourg, The Netherlands and Canada. Michael Robertson has called this situation "Sextuple Jeopardy", an extension of the term double jeopardy.

In response to these lawsuits, Lindows had launched ChoicePC.com, which allows people to purchase lifetime Lindows memberships that includes a free copy of LindowsOS, free LindowsOS upgrades for life, and a ChoicePC.com t-shirt, for $100 USD. All money from the memberships goes towards helping Lindows in its legal battle against Microsoft.

MikeRoweSoft[link]

In a legal dispute, Microsoft sued a Canadian high school student named Mike Rowe over the domain name MikeRoweSoft.com.^[71] The case received international press attention following Microsoft's perceived heavy handed approach to a 12th grade student's part time web design business and the subsequent support that Rowe received from the online community.^[72] A settlement was eventually agreed, with Rowe granting ownership of the domain to Microsoft in return for training and gifts.^[73]

Windows Commander[link]

From 1993 until 2002, Total Commander was called Windows Commander; the name was changed in 2002 out of fear of a lawsuit after the developers received a letter from Microsoft pointing out that the word "windows" was trademarked by Microsoft.^[74]

wxWindows[link]

The wxWindows project was renamed to wxWidgets in September 2003 out of fear of a lawsuit after the founder developer Julian Smart received a letter from Microsoft pointing out that the 'Windows' is a UK trademark owned by Microsoft.^[75]

Microwindows[link]

The Microwindows project was renamed to Nano-X Window System in January 2005, due to legal threats from Microsoft regarding the Windows trademark.^[76]

Other[link]

Xbox 360[link]

Microsoft has been accused of deceiving consumers by concealing the high failure rate of its Xbox 360 game machine. A woman from California sued Microsoft on October 2008 in Superior Court in Sacramento County, stating that the company violated multiple state consumer-protection and unfair-competition laws. The woman alleged that the company continued to sell the Xbox 360 even though it knew that the console's hardware was likely to fail.^[77][78][79]

License refunds and EULA suits[link]

A Windows refund is a type of refund claimed by a user when they purchase a computer with the Microsoft Windows operating system pre-installed on it. The refund is issued by the hardware manufacturer, or occasionally the retailer, for the copy of Microsoft Windows, rather than the whole computer. Due to Microsoft's dominance in desktop computing and a lack of understanding on the manufacturer's or retailer's part, it is often difficult (but not impossible) for users to obtain a refund.

In 2006, a British man purchased a Dell Inspiron 640 m laptop bundled with Microsoft Windows XP Home SP2 preinstalled, but he did not accept Microsoft's End User License Agreement (EULA). In one week after his response, the customer received a "goodwill" refund of GBP £47 (£55.23 including tax) from Dell for a no Windows option, as the copy of the system was an "unused product" according to the software license agreement. Dell had not asked for the installation medium to be returned and commented that although it does not have a Windows refund program, giving a refund in an individual case is not forbidden either.^[80][81][82]

In a civil suit, Italian court rejected HP's argument that the licensing conditions had been set unilaterally by Microsoft and ruled HP to reimburse customer the amount of 90 euro for unused Windows XP bundled with Compaq notebook. The court was of the opinion that HP had to know about the conditions, because they most likely constituted part of the agreement between them and Microsoft. It also found the fact that computers without an operating system are available on the market to be irrelevant. According Süddeutsche Zeitung, a German Dell customer replaced the preinstalled Windows with Linux and had been credited the amount of €78 for operating system and a further unspecified Microsoft program.^[83] A French court ruled Acer to refund the purchase price of preinstalled laptop software, of which was €135.20 for Windows XP Home.^[84] An Israeli Dell customer received $137 as refund for Windows Vista.^[85]

Lenovo Czech Republic wanted its customer to sign a non-disclosure agreement before Windows licence refund to prevent him from talking about the deal, but the customer refused and took the story to local Linux web portal AbcLinuxu.cz, which gave him an equivalent amount of money for telling his story to the world.^[86][87]

$500 billion arbitration[link]

An Arkansas-native by the name of David Stebbins has recently filed a lawsuit against Microsoft, attempting to confirm an arbitration award in the amount of $500 billion. He claims that his basis for the suit is that he is holding corporations to the same contract modification practices that they often use on customers. According to Stebbins, corporations can, and often do, unilaterally amend the terms of their contracts, often in subtle and inconspicuous ways.

Stebbins decided to "give them a taste of their own medicine" and sent notice to Microsoft stating the terms of his Xbox Live gaming contract that he'd like to change, stating that Microsoft accepted the new terms upon not terminating Stebbins' account within ten days. These changes included an arbitration clause requiring Microsoft to respond to an invitation of legal arbitration within 24 hours, and also what Stebbins refers to as a "forfeit victory clause," stating that, if Microsoft does not respond to the arbitration within the 24-hour time frame, Stebbins automatically wins. He initiated an arbitration against Microsoft, claiming $500 billion in damages, but Microsoft did not respond, and Stebbins is now attempting to confirm the arbitration award.

Microsoft has declined to comment.^[88][89][90]

References[link]

External links[link]

• Microsoft On The Issues
• Microsoft Litigation Resource Page
• Microsoft case could make EU 'litigation capital of the world'

Coordinates: 47°38′22.55″N 122°7′42.42″W / 47.6395972°N 122.12845°W / 47.6395972; -122.12845

Microsoft Corporation

Type	Public
Traded as	NASDAQ: MSFT SEHK: 4338 Dow Jones Industrial Average component NASDAQ-100 component S&P 500 component
Industry	Computer software Online services Video games
Founded	Albuquerque, New Mexico, United States (April 4, 1975 (1975-04-04))
Founder(s)	Paul Allen, Bill Gates
Headquarters	Microsoft Redmond Campus, Redmond, Washington, United States
Area served	Worldwide
Key people	Steve Ballmer (CEO) Bill Gates (Chairman)
Products	See listing
Services	See listing
Revenue	US$ 69.94 billion (2011)
Operating income	US$ 27.16 billion (2011)
Net income	US$ 23.15 billion (2011)
Total assets	US$ 108.7 billion (2011)
Total equity	US$ 57.08 billion (2011)
Employees	92,000 (2011)
Subsidiaries	List of Microsoft subsidiaries
Website	microsoft.com
References: [1]

Microsoft Corporation (NASDAQ: MSFT) is an American multinational corporation headquartered in Redmond, Washington, United States that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions. Established on April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800, Microsoft rose to dominate the home computer operating system market with MS-DOS in the mid-1980s, followed by the Microsoft Windows line of operating systems. Microsoft is one of the largest software corporations in the world.

Microsoft would also come to dominate the office suite market with Microsoft Office. The company has diversified into the video game industry with the Xbox and Xbox 360 consoles and the consumer electronics and digital services market MSN, the Zune and the Windows Phone OS. The ensuing rise of stock in the company's 1986 initial public offering (IPO) made an estimated three billionaires and 12,000 millionaires from Microsoft employees (Forbes 400 list revealed that in March 2011 both Jon Shipley and Nathan Myhrvold lost their billionaire status). In May 2011, Microsoft Corporation acquired Skype Communications for $8.5 billion.^[2]

Primarily in the 1990s, critics contend Microsoft used monopolistic business practices and anti-competitive strategies including refusal to deal and tying, put unreasonable restrictions in the use of its software, and used misrepresentative marketing tactics; both the U.S. Department of Justice and European Commission found the company in violation of antitrust laws. Known for its interviewing process with obscure questions, various studies and ratings were generally favorable to Microsoft's diversity within the company as well as its overall environmental impact with the exception of the electronics portion of the business.

History[link]

Early history[link]

Paul Allen and Bill Gates, childhood friends with a passion in computer programming, were seeking to make a successful business utilizing their shared skills. The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems's (MITS) Altair 8800 microcomputer. Allen noticed that they could program a BASIC interpreter for the device; after a call from Gates claiming to have a working interpreter, MITS requested a demonstration. Since they didn't actually have one, Allen worked on a simulator for the Altair while Gates developed the interpreter. Although they developed the interpreter on a simulator and not the actual device, the interpreter worked flawlessly when they demonstrated the interpreter to MITS in Albuquerque, New Mexico in March 1975; MITS agreed to distribute it, marketing it as Altair BASIC.^{[3]:108, 112–114} They officially established Microsoft on April 4, 1975, with Gates as the CEO.^[5] Allen came up with the original name of "Micro-Soft," as recounted in a 1995 Fortune magazine article. In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office, "ASCII Microsoft".^[6] The company moved to a new home in Bellevue, Washington in January 1979.^[5]

Microsoft Inc. logo history
Logo	Years
	Microsoft "blibbet" logo, filed August 26, 1982 at the USPTO and used until 1987.[7]
	Microsoft "Pac-Man" logo, designed by Scott Baker and used since 1987, with the 1994–2002 slogan "Where do you want to go today?".[8][9]
	Microsoft logo as of 2006–2011, with the slogan "Your potential. Our passion."[9]
	Logo by Microsoft with the slogan"Be What's Next." 2011–present.[10]

Microsoft entered the OS business in 1980 with its own version of Unix, called Xenix.^[11] However, it was MS-DOS that solidified the company's dominance. After negotiations with Digital Research failed, IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS, which was set to be used in the upcoming IBM Personal Computer (IBM PC).^[12] For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products, branding it as MS-DOS, which IBM rebranded to PC-DOS. Following the release of the IBM PC in August 1981, Microsoft retained ownership of MS-DOS. Since IBM copyrighted the IBM PC BIOS, other companies had to reverse engineer it in order for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the operating systems. Due to various factors, such as MS-DOS's available software selection, Microsoft eventually became the leading PC operating systems vendor.^[4][13]:210 The company expanded into new markets with the release of the Microsoft Mouse in 1983, as well as a publishing division named Microsoft Press.^[3]:232 Paul Allen resigned from Microsoft in February after developing Hodgkin's disease.^[3]:231

1984–1994: Windows and Office[link]

While jointly developing a new OS with IBM in 1984, OS/2, Microsoft released Microsoft Windows, a graphical extension for MS-DOS, on November 20.^{[3]:242–243, 246} Microsoft moved its headquarters to Redmond on February 26, 1986, and on March 13 the company went public;^[14] the ensuing rise in the stock would make an estimated four billionaires and 12,000 millionaires from Microsoft employees.^[15] Due to the partnership with IBM, in 1990 the Federal Trade Commission set its eye on Microsoft for possible collusion; it marked the beginning of over a decade of legal clashes with the U.S. Government.^[16] Microsoft announced the release of its version of OS/2 to original equipment manufacturers (OEMs) on April 2, 1987;^{[3]:243–244} meanwhile, the company was at work on a 32-bit OS, Microsoft Windows NT, using ideas from OS/2; it shipped on July 21, 1993 with a new modular kernel and the Win32 application programming interface (API), making porting from 16-bit (MS-DOS-based) Windows easier. Once Microsoft informed IBM of NT, the OS/2 partnership deteriorated.^[17]

Microsoft introduced its office suite, Microsoft Office, in 1990. The software bundled separate office productivity applications, such as Microsoft Word and Microsoft Excel.^[3]:301 On May 22 Microsoft launched Windows 3.0 with a streamlined user interface graphics and improved protected mode capability for the Intel 386 processor.^[18] Both Office and Windows became dominant in their respective areas.^[19][20] Novell, a Word competitor from 1984–1986, filed a lawsuit years later claiming that Microsoft left part of its APIs undocumented in order to gain a competitive advantage.^[21]

On July 27, 1994, the U.S. Department of Justice, Antitrust Division filed a Competitive Impact Statement that said, in part: "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced many OEMs to execute anti-competitive "per processor" licenses. Under a per processor license, an OEM pays Microsoft a royalty for each computer it sells containing a particular microprocessor, whether the OEM sells the computer with a Microsoft operating system or a non-Microsoft operating system. In effect, the royalty payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax, on the OEM's use of a competing PC operating system. Since 1988, Microsoft's use of per processor licenses has increased."^[22]

1995–2005: Internet and the 32-bit era[link]

Bill Gates giving his deposition in 1998 for the United States v. Microsoft trial. Once the U.S. Department of Justice 1993 took over from the Federal Trade Commission, a protracted legal wrangling between Microsoft and the department ensued, resulting in various settlements and possible blocked mergers. Microsoft would point to companies such as AOL-Time Warner in its defense.^[16]

Following Bill Gates's internal "Internet Tidal Wave memo" on May 26, 1995 Microsoft began to redefine its offerings and expand its product line into computer networking and the World Wide Web.^[23] The company released Windows 95 on August 24, 1995, featuring pre-emptive multitasking, a completely new user interface with a novel start button, and 32-bit compatibility; similar to NT, it provided the Win32 API.^[24][25]:20 Windows 95 came bundled with the online service MSN, and for OEMs Internet Explorer, a web browser. Internet Explorer was not bundled with the retail Windows 95 boxes because the boxes were printed before the team finished the web browser, and instead was included in the Windows 95 Plus! pack.^[26] Branching out into new markets in 1996, Microsoft and NBC Universal created a new 24/7 cable news station, MSNBC.^[27] Microsoft created Windows CE 1.0, a new OS designed for devices with low memory and other constraints, such as personal digital assistants.^[28] In October 1997, the Justice Department filed a motion in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and asked the court to stop the bundling of Internet Explorer with Windows.^{[3]:323–324}

Bill Gates handed over the CEO position on January 13, 2000 to Steve Ballmer, an old college friend of Gates and employee of the company since 1980, creating a new position for himself as Chief Software Architect.^{[5][3]:111, 228} Various companies including Microsoft formed the Trusted Computing Platform Alliance in October 1999 to, among other things, increase security and protect intellectual property through identifying changes in hardware and software. Critics decry the alliance as a way to enforce indiscriminate restrictions over how consumers use software, and over how computers behave, a form of digital rights management; for example the scenario where a computer is not only secured for its owner, but also secured against its owner as well.^[29][30] On April 3, 2000, a judgment was handed down in the case of United States v. Microsoft,^[31] calling the company an "abusive monopoly";^[32] it settled with the U.S. Department of Justice in 2004.^[14] On October 25, 2001 Microsoft released Windows XP, unifying the mainstream and NT lines under the NT codebase.^[33] The company released the Xbox later that year, entering the game console market dominated by Sony and Nintendo.^[34] In March 2004 the European Union brought antitrust legal action against the company, citing it abused its dominance with the Windows OS, resulting in a judgment of €497 million ($613 million) and to produce new versions of Windows XP without Windows Media Player, Windows XP Home Edition N and Windows XP Professional N.^[35][36]

2006–present: Windows Vista, mobile, SaaS[link]

CEO Steve Ballmer at the MIX event in 2008. In an interview about his management style in 2005, he mentioned that his first priority was to get the people he delegates to in order. Ballmer also emphasized the need to continue pursuing new technologies even if initial attempts fail, citing the original attempts with Windows as an example.^[37]

Released in January 2007, the next version of Windows, Windows Vista, focused on features, security, and a redesigned user interface dubbed Aero.^[38][39] Microsoft Office 2007, released at the same time, featured a "Ribbon" user interface which was a significant departure from its predecessors. Relatively strong sales of both titles helped to produce a record profit in 2007.^[40] The European Union imposed another fine of €899 million ($1.4 billion) for Microsoft's lack of compliance with the March 2004 judgment on February 27, 2008, saying that the company charged rivals unreasonable prices for key information about its workgroup and backoffice servers. Microsoft stated that it was in compliance and that "these fines are about the past issues that have been resolved".^[41]

Bill Gates retired from his role as Chief Software Architect on June 27, 2008 while retaining other positions related to the company in addition to being an advisor for the company on key projects.^[42] Azure Services Platform, the company's entry into the cloud computing market for Windows, launched on October 27, 2008.^[43] On February 12, 2009, Microsoft announced its intent to open a chain of Microsoft-branded retail stores, and on October 22, 2009 the first retail Microsoft Store opened in Scottsdale, Arizona; the same day the first store opened Windows 7 was officially released to the public. Windows 7's focus was on refining Vista with ease of use features and performance enhancements, rather than a large reworking of Windows.^[44][45][46]

As the smartphone industry boomed beginning in 2007, Microsoft struggled to keep up with its rivals Apple and Google in providing a modern smartphone operating system. As a result, in 2010, Microsoft revamped their aging flagship mobile operating system, Windows Mobile, replacing it with the new Windows Phone OS; along with a new strategy in the smartphone industry that has Microsoft working more closely with smartphone manufactures, such as Nokia, and to provide a consistent user experience across all smartphones using Microsoft's Windows Phone OS.

Microsoft is a founding member of the Open Networking Foundation started on March 23, 2011. Other founding companies include Google, HP Networking, Yahoo, Verizon, Deutsche Telekom and 17 other companies. The nonprofit organization is focused on providing support for a new cloud computing initiative called Software-Defined Networking.^[47] The initiative is meant to speed innovation through simple software changes in telecommunications networks, wireless networks, data centers and other networking areas.^[48]

In May 2012, Microsoft opened its social networking site So.cl to the general public. ^[49] On 31st May 2012, Microsoft released the final version of its next generation [Windows]] 8 software.It is designed to power devices ranging from tablets to desktop compters.^[50]

Product divisions[link]

For the 2010 fiscal year, Microsoft had five product divisions: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division.

Windows & Windows Live Division, Server and Tools, Online Services Division[link]

The company's Client division produces the flagship Windows OS line such as Windows 7; it also produces the Windows Live family of products and services. Server and Tools produces the server versions of Windows, such as Windows Server 2008 R2 as well as a set of development tools called Microsoft Visual Studio, Microsoft Silverlight, a web application framework, and System Center Configuration Manager, a collection of tools providing remote-control abilities, patch management, software distribution and a hardware/software inventory. Other server products include: Microsoft SQL Server, a relational database management system, Microsoft Exchange Server, for certain business-oriented e-mail and scheduling features, Small Business Server, for messaging and other small business-oriented features; and Microsoft BizTalk Server, for business process management.

Microsoft provides IT consulting ("Microsoft Consulting Services") and produces a set of certification programs handled by the Server and Tools division designed to recognize individuals who have a minimal set of proficiencies in a specific role; this includes developers ("Microsoft Certified Solution Developer"), system/network analysts ("Microsoft Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and administrators ("Microsoft Certified Systems Administrator" and "Microsoft Certified Database Administrator"). Microsoft Press, which publishes books, is also managed by the division. The Online Services Business division handles the online service MSN and the search engine Bing. As of December 2009, the company also possesses an 18% ownership of the cable news channel MSNBC without any editorial control; however, the division develops the channel's website, msnbc.com, in a joint venture with the channel's co-owner, NBC Universal.^[51]

Business Division[link]

The Commons, located on the campus of the company's headquarters in Redmond.

The Microsoft Business Division produces Microsoft Office including Microsoft Office 2010, the company's line of office software. The software product includes Word (a word processor), Access (a relational database program), Excel (a spreadsheet program), Outlook (Groupware, frequently used with Exchange Server), PowerPoint (presentation software), and Publisher (desktop publishing software). A number of other products were added later with the release of Office 2003 including Visio, Project, MapPoint, InfoPath and OneNote. The division also develops enterprise resource planning (ERP) software for companies under the Microsoft Dynamics brand. These include: Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, and Microsoft Dynamics SL. They are targeted at varying company types and countries, and limited to organizations with under 7,500 employees.^[52] Also included under the Dynamics brand is the customer relationship management software Microsoft Dynamics CRM, part of the Azure Services Platform.

Entertainment and Devices Division[link]

The Entertainment and Devices Division produces the Windows CE OS for embedded systems and Windows Phone for smartphones.^[53] Microsoft initially entered the mobile market through Windows CE for handheld devices, eventually developing into the Windows Mobile OS and now, Windows Phone. Windows CE is designed for devices where the OS may not directly be visible to the end user, in particular, appliances and cars. The division also produces computer games that run on Windows PCs and other systems including titles such as Age of Empires, Halo and the Microsoft Flight Simulator series, and houses the Macintosh Business Unit which produces Mac OS software including Microsoft Office 2011 for Mac. Microsoft's Entertainment and Devices Division designs, markets, and manufactures consumer electronics including the Xbox 360 game console, the handheld Zune media player, and the television-based Internet appliance MSN TV. Microsoft also markets personal computer hardware including mice, keyboards, and various game controllers such as joysticks and gamepads.

Culture[link]

Technical reference for developers and articles for various Microsoft magazines such as Microsoft Systems Journal (or MSJ) are available through the Microsoft Developer Network (MSDN). MSDN also offers subscriptions for companies and individuals, and the more expensive subscriptions usually offer access to pre-release beta versions of Microsoft software.^[54][55] In April 2004 Microsoft launched a community site for developers and users, titled Channel9, that provides a wiki and an Internet forum.^[56] Another community site that provides daily videocasts and other services, On10.net, launched on March 3, 2006.^[57] Free technical support is traditionally provided through online Usenet newsgroups, and CompuServe in the past, monitored by Microsoft employees; there can be several newsgroups for a single product. Helpful people can be elected by peers or Microsoft employees for Microsoft Most Valuable Professional (MVP) status, which entitles them to a sort of special social status and possibilities for awards and other benefits.^[58]

Noted for its internal lexicon, the expression "eating our own dog food" is used to describe the policy of using prerelease and beta versions of products inside Microsoft in an effort to test them in "real-world" situations.^[59] This is usually shortened to just "dog food" and is used as noun, verb, and adjective. Another bit of jargon, FYIFV or FYIV ("Fuck You, I'm [Fully] Vested"), is used by an employee to indicate they are financially independent and can avoid work anytime they wish.^[60] The company is also known for its hiring process, mimicked in other organizations and dubbed the "Microsoft interview", which is notorious for off-the-wall questions such as "Why is a manhole cover round?".^[61]

Microsoft is an outspoken opponent of the cap on H1B visas, which allow companies in the U.S. to employ certain foreign workers. Bill Gates claims the cap on H1B visas makes it difficult to hire employees for the company, stating "I'd certainly get rid of the H1B cap" in 2005.^[62] Critics of H1B visas argue that relaxing the limits would result in increased unemployment for U.S. citizens due to H1B workers working for lower salaries.^[63] The Human Rights Campaign Corporate Equality Index, a report of how progressive the organization deems company policies towards LGBT (lesbian, gay, bisexual and transsexual) employees, rated Microsoft as 87% from 2002 to 2004 and as 100% from 2005 to 2010 after they allowed gender expression.^[64]

Criticism[link]

Criticism of Microsoft has followed the company's existence because of various aspects of its products and business practices. Ease of use, stability, and security of the company's software are common targets for critics. More recently, Trojan horses and other exploits have plagued numerous users due to faults in the security of Microsoft Windows and other programs. Microsoft is also accused of locking vendors into their products, and of not following and complying with existing standards in its software.^[65] Total cost of ownership comparisons of Linux as well as Mac OS X to Windows are a continuous point of debate.

The company has been in numerous lawsuits by several governments and other companies for unlawful monopolistic practices. In 2004, the European Union found Microsoft guilty in a highly publicized anti-trust case. Additionally, Microsoft's EULA for some of its programs is often criticized as being too restrictive as well as being against open source software.

Microsoft has been criticized (along with Yahoo, AOL, and other companies) for its involvement in censorship in the People's Republic of China.^[66] Microsoft has also come under criticism for outsourcing jobs to China and India.^[67][68][69] There were reports of poor working conditions at a factory in southern China that makes some of Microsoft's products.^[70]

Criticism of the company has resulted in it being deemed "the evil empire" by some.^[71] In a sci-fi allusion, Microsoft has also been called "The Borg" after the fictional race of aliens in the Star Trek universe. It reflects the perception that Microsoft often acquires technology from other companies rather than developing it in-house^[72], as well as to Microsoft's ability to adapt to and overwhelm its opponents' strategies. ^{[73][74][75][76][77][78]}