Facts: “In 1998, the United States sued Microsoft, alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. 1, 2. After trial, the court found Microsoft had violated Section 2 by unlawfully maintaining its monopoly in the market for Intel-compatible PC operating systems ("OSs") and by unlawfully attempting to monopolize the market for internet browsers, and that it had violated Section 1 by illegally tying its Windows operating system and its Internet Explorer ("IE") browser. The court ordered Microsoft to submit a plan of divestiture that would split the company into an OS business and an applications business, and ordered interim conduct restrictions. Microsoft, 253 F.3d at 45.” (Weil & McMillan, 2003).
The Sherman Antitrust Act prohibits agreements, contracts, combinations, and conspiracies that result in inhibiting or restraining free trade. The act is very broad and can include relationships or agreements that result in price fixing. The Act attempts to either prevent monopolies or break up a monopoly that has been created. Antitrust statutes can be enforced by the federal government through the U.S. Attorney, Federal Trade Commission, through the attorney general of each state, or by individual action. The antitrust provisions of the Sherman Antitrust Act have been used against the railroad industry, the major oil companies, telecommunications, and more recently companies in the high tech industry such as Microsoft. (Mallor, et. al., 2010).
Issues: Did Microsoft maintain a monopoly for their product (PC OS system) in violation of the Sherman Act Section 2? Did Microsoft attempt to create a monopoly for their IE browser in violation of Section 2? Did Microsoft illegally tie together two separate products, IE and Microsoft OS, and create a monopoly in violation of Section 1?
Rules: “§ 1 Sherman Act, 15 U.S.C. § 1 discusses trusts, etc., in restraint of trade illegal; penalty: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.
§ 2 Sherman Act, 15 U.S.C. § 2 addresses monopolizing trade a felony; penalty: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.” (http://usgovinfo. about.com/ blsherman.htm)
Analysis: In U.S. v Microsoft, Judge Jackson ruled against Microsoft finding them in violation of the Sherman Act Sections 1 and 2. However, the D.C. District Court of Appeals found that some of Microsoft’s appeals to the initial judgment had merit, and reversed the violation of Section 2 (on monopolizing the browser market) and they vacated the final judgment on the break-up of IE from Microsoft OS. They did require a review by a new judge on making the browser market more competitive for internet browser companies.
Conclusion: “In the United States, the Department of Justice decided not to pursue the bundling aspect of the case (bundling of Windows and Internet Explorer) after the U.S. Court of Appeals for the D. C. Circuit reversed the federal district court's finding of a per se violation for attempted monopolization of the browser market” (Economides & Lianos, 2009). While this was the conclusion of the U.S. Department of Justice, I believe that based on reading about this case, and other antitrust issues in Europe with Microsoft and subsequent settlements, that Microsoft did push the envelope in their development of IE and its tie to their PC OS. It was a great move on their part to bundle their applications for the ease of their customers, however, it may have actually impacted other companies selling internet browsers because of the bundling. Does that mean that a good business and marketing strategy is illegal? Well, if it creates a monopoly for one, and completely eliminating competition, yes. But I’m uncertain that this was the case for Microsoft.
I personally agree that the breakup of the Microsoft applications (IE and OS) would not have been the best approach to address the issues presented. However, breaking up companies (e.g. telephone companies, cable, etc.) and disallowing the merger of others (e.g. cell phone companies), may be necessary if the monopoly created is so large as to impact entire regions of countries. However, I do not believe this was necessary in this case.

References
Economides, N. (2001). The Microsoft antitrust case. Journal of Industry, Competition and Trade, 1(1), 7. Retrieved January 31, 2012, from ABI/INFORM Global. (Document ID: 352547381).
Economides, N., & Lianos, I. (2009). The elusive antitrust standard on bundling in Europe and in the United States in the aftermath of the Microsoft cases. Antitrust Law Journal, 76(2), 483-567. Retrieved January 25, 2012, from ABI/INFORM Global. (Document ID: 1953767151).
Mallor, J., Barnes, A., Bowers, T., & Langvardt, A. (2010). Business law: The ethical, global and e-commerce environment (14th Edition). United States; McGraw Hill/Irwin.
Shapiro, C. (2008). Microsoft: A remedial failure. Antitrust Law Journal, 75(3), 739-772. Retrieved January 31, 2012, from ABI/INFORM Global. (Document ID: 1706599341).
Weil, N., & McMillan, R. (2003). AOL, Microsoft settle Netscape suit. PCWorld. Retrieved from http://www.pcworld.com/news/article/0,aid,110930,00.asp