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. Last Updated: 07/27/2016

Microsoft Counters 'Monopoly' Ruling

WASHINGTON -- Microsoft Corp. argued in its antitrust case Tuesday that its actions were lawful and that it lacked monopoly power because it faced competition and was unable to unilaterally raise its prices.

In a court filing, the software giant repeatedly disagreed with the findings of fact reached by U.S. District Court Judge Thomas Penfield Jackson last year that concluded that Microsoft's dominance in personal computer operating systems had harmed consumers, competitors and computer makers.

"Even accepting the court's findings of fact, plaintiffs still have not satisfied their burden under the governing law on any of their claims," Microsoft argued in its reply to briefs by the Justice Department and 19 states.

Jackson will use the briefs, a further reply from each side and oral arguments Feb. 22 to help him decide the law in the case. If he finds Microsoft violated the law, he will have to consider remedies.

Microsoft disagreed with Jackson's finding of fact that it held monopoly power in the market for Intel-powered personal computers.

Microsoft said the narrow definition excluded "many of the most serious competitive threats faced by Microsoft's operating systems." The firm said consumers may purchase Apple Macintosh workstations running the Unix operating system and in the next few years will have the option of "information appliances."

The company also argued it "cannot control prices or exclude competition for a substantial period of time," contradicting Jackson's finding of fact that it never had to consider competitors when it set prices. A Justice Department official said Microsoft's arguments favored monopoly.

"Microsoft's arguments would give a monopoly virtually unlimited freedom to use its power to crush competition, harm consumers and stifle innovation," the official said. "Microsoft's brief ignores the court's findings of fact and distorts key legal precedents."

The company said earlier court rulings gave it the right to design its Windows operating system to include the Internet Explorer web browser.

The firm also said it never needed to give Netscape, which was its competitor in the "browser wars" of the mid-1990s, any information to help in that competition.

"Antitrust laws impose no affirmative obligation on a firm - even one with monopoly power - to assist its competitors by pre-disclosing technical information about its new products prior to their release," Microsoft argued.

Shortly before Tuesday's court filing, Microsoft reported stronger than expected earnings for its second quarter, ending in December, helped by strong demand for personal computers.

Profits rose to 44 cents a share from 36 cents in the same quarter a year earlier, marking a continuation of a strong year in which Microsoft has exceeded analysts' forecasts.

Both sides in the antitrust case have been meeting regularly with a Chicago judge appointed by Jackson as a mediator, but there are few signs of a settlement emerging.

Reports last week that the government was seeking to break up the world's largest software company, were criticized as incomplete by people familiar with the case.

Microsoft said talk of a breakup was reckless and accused Justice Department officials of deliberately leaking information.

The Justice Department denied it discussed the mediation talks.