“Linux” and “Open-Source” in Microsoft Antitrust Judge’s Findings of Fact

By Case Roole

Below I have extracted those paragraphs from Judge Jackson’s
findings of fact
in the antitrust case against Microsoft that contain the word
“Linux” or “open-source”.

I have included the nearest section headers, regardless of
level. Ellipsis indicates that one or more paragraphs are present
at that spot in a section so one can see what the relative location
of the extracted paragraph is.

Note that there is no mention of “free software”,
“Caldera”, “Red Hat”, “KDE” or
“Wine”. There are a few mentions of “UNIX”,
mostly in relation to Microsoft’s offer of browser market division
to Netscape.

c. Fringe Operating Systems


50. The experience of the
Linux operating system, a version of which runs on
Intel- compatible PCs, similarly fails to refute the existence of
an applications barrier to entry. Linux is an
“open source” operating system that was created,
and is continuously updated, by a global network of software
developers who contribute their labor for free. Although
Linux has between ten and fifteen million users,
the majority of them use the operating system to run servers, not
PCs. Several ISVs have announced their development of (or plans to
develop) Linux versions of their applications. To
date, though, legions of ISVs have not followed the lead of these
first movers. Similarly, consumers have by and large shown little
inclination to abandon Windows, with its reliable developer
support, in favor of an operating system whose future in the PC
realm is unclear. By itself, Linux’s
open-source development model shows no signs of
liberating that operating system from the cycle of consumer
preferences and developer incentives that, when fueled by Windows’
enormous reservoir of applications, prevents non-Microsoft
operating systems from competing.

3. Open-Source Applications Development

51. Since application developers working under
an open-source model are not looking to recoup
their investment and make a profit by selling copies of their
finished products, they are free from the imperative that compels
proprietary developers to concentrate their efforts on Windows. In
theory, then, open-source developers are at least
as likely to develop applications for a non-Microsoft operating
system as they are to write Windows-compatible applications. In
fact, they may be disposed ideologically to focus their efforts on
open-source platforms like Linux.
Fortunately for Microsoft, however, there are only so many
developers in the world willing to devote their talents to writing,
testing, and debugging software pro bono publico. A small corps may
be willing to concentrate its efforts on popular applications, such
as browsers and office productivity applications, that are of value
to most users. It is unlikely, though, that a sufficient number of
open-source developers will commit to developing
and continually updating the large variety of applications that an
operating system would need to attract in order to present a
significant number of users with a viable alternative to Windows.
In practice, then, the open-source model of
applications development may increase the base of applications that
run on non-Microsoft PC operating systems, but it cannot dissolve
the barrier that prevents such operating systems from challenging


C. Viable Alternatives to Windows


54. OEMs are the most important direct
customers for operating systems for Intel-compatible PCs. Because
competition among OEMs is intense, they pay particularly close
attention to consumer demand. OEMs are thus not only important
customers in their own right, they are also surrogates for
consumers in identifying reasonably-available commercial
alternatives to Windows. Without significant exception, all OEMs
pre-install Windows on the vast majority of PCs that they sell, and
they uniformly are of a mind that there exists no commercially
viable alternative to which they could switch in response to a
substantial and sustained price increase or its equivalent by
Microsoft. For example, in 1995, at a time when IBM still placed
hope in OS/2’s ability to rival Windows, the firm nevertheless
calculated that its PC company would lose between seventy and
ninety percent of its sales volume if failed to load Windows 95 on
its PCs. Although a few OEMs have announced their intention to
pre-install Linux on some of the computers they
ship, none of them plan to install Linux in lieu
of Windows on any appreciable number of PC (as opposed to server)
systems. For its part, Be is not even attempting to persuade OEMs
to install the BeOS on PCs to the exclusion of Windows.


F. Price Restraint Posed by Long-Term Threats


60. The exponential growth of the Internet
represents an inflection point born of complementary technological
advances in the computer and telecommunications industries. The
rise of the Internet in turn has fueled the growth of server-based
computing, middleware, and open-source software
development. Working together, these nascent paradigms could oust
the PC operating system from its position as the primary platform
for applications development and the main interface between users
and their computers. Microsoft recognizes that new paradigms could
arise to depreciate the value of selling PC operating systems;
however, the fact that these new paradigms already exist in
embryonic or primitive form does not prevent Microsoft from
enjoying monopoly power today. For while consumers might one day
turn to network computers, or Linux, or a
combination of middleware and some other operating system, as an
alternative to Windows, the fact remains that they are not doing so
today. Nor are consumers likely to do so in appreciable numbers any
time in the next few years. Unless and until that day arrives, no
significant percentage of consumers will be able to abandon Windows
without incurring substantial costs. Microsoft can therefore set
the price of Windows substantially higher than that which would be
charged in a competitive market — or impose other burdens on
consumers — without losing so much business as to make the action
unprofitable. If Microsoft exerted its power solely to raise price,
the day when users could turn away from Windows without incurring
substantial costs would still be several years distant. Moreover,
Microsoft could keep its prices high for a significant period of
time and still lower them in time to meet the threat of a new
paradigm. Alternatively, Microsoft could delay the arrival of a new
paradigm on the scene by expending surplus monopoly power in ways
other than the maintenance of high price.