ÿWPCŠ *ñ\_í%Þ(Õ9«¢æR](–àï¸yߣÉK(\=«¨xóN|füvÏ9¡òõÒ¸% »•ÐU6ƹÊ×ÖÏK}GÂŽøGOÍ”ñ¦Í{Û(pN¤ÂaÊÝ# bpÊo¼m_Öwë‚p¤µW½Ó„®H¼§ Y¸ê›+·_¢•|?O‰þ4û%ª&Fo®ÚÒ'¨cÐtô–TR蓱laª$=EÅNœÐænó,Æk Ú ±ñ4—¦e˜ROCW¸Ó^¬¤ˆX8¹"ùÒ ÕÙZIc‡ÃÜá…¡ÌL`?Õû+OÂ?^Gás‚cb9•™R³¬˜ëø¾)§ à¶üÔÑüö¿±¥÷ù1[*EcŒ -¼áåÅ5¾mõß Çyç{é\4nfv½Ç _~$e%=?xýÞ]03š¦b …ÉŸLëm²|Û}‘áç“)Ãm·|Óàw¹Œ[’®Å,îô?¢)—b3Oõ˜¨ŽžcøÚ•ÔÙ`«ùNp±Rèb£Í6÷ÿˆuÍNú0ºÈOjv 4CÏÙ-¥s/Tn1±’ñÅ5ÃÒÎ. 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ÚƒÚÚ  Ú.à0 àÛ€Ûi., ii., iii.,Level 1Level 2Level 3Level 4Level 54#.î2Quick 1.ÚƒÚÚ  Ú.à0 àÛ€Û6#/~4Quick i. Úƒ ÚÚ  Ú.à0 àÛ€ Û(:hO$´´Ô2ÔÚ  ÚÚ  Ú.Ô3  Ôà0  à d(ehCEKQW]cioAutoList41.1.1.1.1.1.1.1.Ý ƒ¿!ÝÑ  ÑÑ8€ ÅõõdÆdÈ8ÑÑ  ÑÝ  ÝÔ_ÔÔ‡XUGXõõÔÓ  ÓÑ€{ÀÑÑ€{ÇÑÓ$°,X›Xÿÿ°œX$Óà@@° ° ìàUNITED€STATES€DISTRICT€COURTÐ ° ÐFOR€THE€DISTRICT€OF€COLUMBIAÌÓ›Ó____________________________________Ìà  àà ` àà ¸ àà  àà h àà À à)ÌUNITED€STATES€OF€AMERICA,à0 h àà0Àh(#h(#à)Ð`°À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àPlaintiff,à0  àà0h(#(#àà0Àh(#h(#à)Ð8 ˆÀ(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àv.à0 ¸ àà0¸ (#¸ (#àà0h(#(#àà0Àh(#h(#à)à0À(#À(#àCivil€Action€No.€98„1232€(Ô_ÔTPJÔ_Ô)Ð `(#(# Ðà  àà ` àà ¸ àà  àà h àà À à)ÌMICROSOFT€CORPORATION,à0 h àà0Àh(#h(#à)Ðè 8 À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àDefendant.à0  àà0h(#(#àà0Àh(#h(#à)ÐÀ À(#À(# Ð____________________________________)Ìà  àà ` àà ¸ àà  àà h àà À à)ÌSTATE€OF€NEW€YORK,€òòetóó€òòal.óó,à0 h àà0Àh(#h(#à)Ð„Ô À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àPlaintiffs,à0  àà0h(#(#àà0Àh(#h(#à)Ð\¬À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àv.à0 ¸ àà0¸ (#¸ (#àà0h(#(#àà0Àh(#h(#à)à0À(#À(#àÐ4„(#(# Ðà  àà ` àà ¸ àà  àà h àà À à)ÌMICROSOFT€CORPORATION,à0 h àà0Àh(#h(#à)Ð \À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ì€€à0  àà0` (#(#àDefendant.à0` (#` (#àà0h(#(#àà0Àh(#h(#à)Ðä4À(#À(# Ð____________________________________)à0  àÔ#†õ ÅõXXUG|#ÔÔ‡XUGXõõ ÅÔCivil€Action€No.€98„1233€(Ô_ÔTPJÔ_Ô)Ô#†õ ÅõXXUG  #ÔÔ€XUGXõõ ÅÔÐÐ (#(# Ðà  àà ` àà ¸ àà  àà h àà À à)ÌMICROSOFT€CORPORATION,à0 h àà0Àh(#h(#à)ШøÀ(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àCounterclaim„Plaintiff,à0 À à)ЀÐÀ(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)ÌØØÓL€ (3LÓÝ ‚#hO ÝÝ  Ýà  àà ` àÝ‚#hOX ÝÔ2ÔÚ  ÚvÚ  Ú.Ô3  Ôà0 ¸ àÝ  Ýà  àà h àà À à)݃#hOX › ÝŒÐX ¨¸ (#¸ (# ÐŒÝ  Ýà  àà ` àà ¸ àà  àà h àà À à)ÌELIOT€Ô_ÔSPITZERÔ_Ô,€attorney€general€of€theà0 À à)Ð0"€ À(#À(# Ðà  àState€of€New€York,€in€his€officialà0 À à)Ð#l!À(#À(# Ðà  àcapacity,€òòetóó€òòal.óó,à0  àà0h(#(#àà0Àh(#h(#à)Ð$X"À(#À(# Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àà ` àCounterclaim„Defendants.à0 À à)Ðà%0!$À(#À(# Ð____________________________________)Ìà  àà ` àà ¸ àà  àà h àà À àà  àÌÓ  Óòòò òÓÓÌâ âFINDINGS€OF€FACTó óÐ |*Ì%) ÐÑ{ÀÑâ âÑ8€UGXXdìõõdÆ8Ñâ âÑ  ÑóóÓ  Óà  àThese€consolidated€civil€antitrust€actions€alleging€violations€of€the€Sherman€Act,€ðððð€1€andÐ ° Ðâ â2,€and€various€state€statutes€by€the€defendant€Microsoft€Ô_ÔCorporationÔ_Ô€were€tried€to€the€Court,Ïsitting€without€a€jury,€between€October€19,€1998,€and€June€24,€1999.€€The€Court€has€consideredÏthe€record€evidence€submitted€by€the€parties,€made€determinations€as€to€its€relevancy€andÏmateriality,€assessed€the€credibility€of€the€testimony€of€the€witnesses,€both€written€and€oral,€andÏascertained€for€its€purposes€the€probative€significance€of€the€documentary€and€visual€evidenceÏpresented.€€Upon€the€record€before€the€Court€as€of€July€28,€1999,€at€the€close€of€the€admission€ofÏevidence,€pursuant€to€òòFed.€R.€Civ.€P.óó€52(a),€the€Court€finds€the€following€facts€to€have€beenÐ ˜è  Ðproved€by€a€preponderance€of€the€evidence.€€The€Court€shall€state€the€conclusions€of€law€to€beÏdrawn€therefrom€in€a€separate€Memorandum€and€Order€to€be€filed€in€due€course.ò òÐ H˜ ÐI.à0  àBACKGROUNDó óÐ p(#(# Ðà  à1.à ` àA€ð ðpersonal€computerðð€(ð ðPCðð)€is€a€Ôf  ÔÔg ÔÔf  ÔÔg Ôdigital€information€processing€deviceÔf  ÔÔg Ô€designedÐ øH Ðfor€use€by€one€person€at€a€time.Ôf  ÔÔg Ô€€A€typical€PC€consists€of€central€processing€components€(òòe.g.óó,€aÐ Ð  Ðmicroprocessor€and€main€memory)€and€mass€data€storage€(such€as€a€hard€disk).€€A€typical€PCÏsystem€consists€of€a€PC,€certain€peripheral€input/output€devices€(including€a€monitor,€a€keyboard,Ïa€mouse,€and€a€printer),€and€an€operating€system.€€Ôf  ÔÔg ÔPC€systems,€which€include€desktop€and€laptopÏmodels,€can€be€distinguished€from€more€powerful,€more€expensive€computer€systems€known€asÏð ðservers,ðð€which€are€designed€to€provide€Ôf  ÔÔg Ôdata,€Ôf  ÔÔg ÔservicesÔf  ÔÔg Ô,Ôf  ÔÔg Ô€and€functionality€through€aÔf  ÔÔg ÔÔf  ÔÔg Ô€digitalÔf  ÔÔg ÔÏnetwork€to€multiple€users.Ôf  ÔÔg ÔÔf  ÔÔg ÔØØÌÓb€ +(eh8(bÓà  à2.à ` àAn€ð ðoperating€systemðð€is€a€software€program€that€controls€the€allocation€and€useÐ ¸'#& Ðof€computerÔf  ÔÔg Ô€resources€(such€asÔf  ÔÔg Ô€central€processing€unit€time,€Ôf  ÔÔg ÔÔf  ÔÔg Ômain€memory€space,€disk€space,€andÏinput/output€channels).€€The€operating€system€also€supports€the€functions€of€software€programs,Ð h+¸&* ÐÑ{ÇÑâ âÑ8€UGXXdìXXdì8Ñâ âÑ  Ñcalled€ð ðapplications,ðð€that€perform€specific€user„oriented€tasks.€€The€operating€system€supportsÐ ° Ðthe€functions€of€applications€by€exposing€interfaces,€called€ð ðapplication€programmingÏinterfaces,ðð€or€ð ðAPIs.ðð€€These€are€synapses€at€which€the€developer€of€an€application€can€connectÏto€invoke€pre„fabricated€blocks€of€code€in€the€operating€system.€€These€blocks€of€code€in€turnÏperform€crucial€tasks,€such€as€displaying€text€on€the€computer€screen.€€Because€it€supportsÏapplications€while€interacting€more€closely€with€the€PC€systemððs€hardware,€the€operating€systemÏis€said€to€serve€as€a€ð ðplatform.ððÌà  à3.à ` àAn€Intel„compatible€PC€is€one€designed€to€function€with€Intelððs€80x86/PentiumÐ ˜è  Ðfamilies€of€microprocessors€or€with€compatible€microprocessors€manufactured€by€Intel€or€byÏother€firms.Ôf  ÔÔg ÔÌà  à4.à ` àAn€operating€system€designed€to€run€on€an€Intel„compatible€PC€will€not€functionÐ  p Ðon€a€Ôf  ÔÔg ÔÔf  ÔÔg Ônon„Intel„compatibleÔf  ÔÔg Ô€PC,€nor€will€an€operating€system€designed€for€Ôf  ÔÔg ÔÔf  ÔÔg Ôa€non„Intel„compatibleÔf  ÔÔg ÔÏPC€function€on€an€Intel„compatible€one.€€Similarly,€an€application€that€relies€on€APIs€specific€toÏone€operating€system€will€not,€generally€speaking,€function€on€another€operating€system€unless€itÏis€first€adapted,€or€ð ðported,ðð€to€the€APIs€of€the€other€operating€system.Ìà  à5.à ` àDefendant€Microsoft€Corporation€is€organized€under€the€laws€of€the€State€ofÐ X ¨ ÐWashington,€and€its€headquarters€are€situated€in€Redmond,€Washington.€€Since€its€inception,ÏMicrosoft€has€focused€primarily€on€developing€software€and€licensing€it€to€various€purchasers.Ìà  à6.à ` àIn€1981,€Microsoft€released€the€first€version€of€its€Microsoft€Disk€OperatingÐ à%0!$ ÐSystem,€commonly€known€as€ð ðMS„DOS.ðð€€The€system€had€a€character„based€user€interface€thatÏrequired€the€user€to€type€specific€instructions€at€a€command€prompt€in€order€to€perform€tasksÏÔ_Ôsuch€as€launching€applications€and€copying€files.€€When€the€International€Business€MachinesÐ h+¸&* ÐCorporation€(ð ðIBMðð)€selected€MS„DOS€for€pre„installation€on€its€first€generation€of€PCs,ÏMicrosoftððs€product€became€the€predominant€operating€system€sold€for€Intel„compatible€PCs.Ìà  à7.à ` àIn€1985,€Microsoft€began€shipping€a€software€package€called€Windows.€€TheÐ `° Ðproduct€included€a€graphical€user€interface,€which€enabled€users€to€perform€tasks€by€selectingÏicons€and€words€on€the€screen€using€a€mouse.€€Although€originally€just€a€user„interface,€orÏð ðshell,ðð€sitting€on€top€of€MS„DOS,€Windows€took€on€more€operating„system€functionality€overÏtime.Ìà  à8.à ` àIn€1995,€Microsoft€introduced€a€software€package€called€Windows€95,€whichÐ ˜è  Ðannounced€itself€as€the€first€operating€system€for€Intel„compatible€PCs€that€exhibited€the€sameÏsort€of€integrated€features€as€the€Mac€OS€running€PCs€manufactured€by€Apple€Computer,€Inc.Ï(ð ðAppleðð).€€Windows€95€enjoyed€unprecedented€popularity€with€consumers,€and€in€June€1998,ÏMicrosoft€released€its€successor,€Windows€98.Ìà  à9.à ` àMicrosoft€is€the€leading€supplier€of€operating€systems€for€PCs.€€The€companyÐ Ð  Ðtransacts€business€in€all€fifty€of€the€United€States€and€in€most€countries€around€the€world.€Ìà  àØ€Ø10.à ` àMicrosoft€licenses€copies€of€its€software€programs€directly€to€consumers.€€TheÐ €Ð Ðlargest€part€of€its€MS„DOS€and€Windows€sales,€however,€consists€of€licensing€the€products€toÏmanufacturers€of€PCs€(known€as€ð ðoriginal€equipment€manufacturersðð€or€ð ðOEMsðð),€such€as€theÏIBM€PC€Company€and€the€Compaq€Computer€Corporation€(ð ðCompaqðð).€€An€OEM€typicallyÏinstalls€a€copy€of€Windows€onto€one€of€its€PCs€before€selling€the€package€to€a€consumer€under€aÏsingle€price.Ìà  à11.à ` àThe€Internet€is€a€global€electronic€network,€consisting€of€smaller,€interconnectedÐ )à$( Ðnetworks,€which€allows€millions€of€computers€to€exchange€information€over€telephone€Ô_Ôwires,Ð h+¸&* Ðdedicated€data€cables,€and€wireless€links.€€The€Internet€links€PCs€by€means€of€servers,€which€runÏspecialized€operating€systems€and€applications€designed€for€servicing€a€network€environment.Ìà  à12.à ` àThe€World€Wide€Web€(ð ðthe€Webðð)€is€a€massive€collection€of€digital€informationÐ `° Ðresources€stored€on€servers€throughout€the€Internet.€€These€resources€are€typically€provided€in€theÏform€of€hypertext€documents,€commonly€referred€to€as€ð ðWeb€pages,ðð€that€may€incorporate€anyÏcombination€of€text,€graphics,€audio€and€video€content,€software€programs,€and€other€data.€€AÏuser€of€a€computer€connected€to€the€Internet€can€publish€a€page€on€the€Web€simply€by€copying€itÏinto€a€specially€designated,€publicly€accessible€directory€on€a€Web€server.€€Some€Web€resourcesÏare€in€the€form€of€applications€that€provide€functionality€through€a€userððs€PC€system€but€actuallyÏexecute€on€a€server.Ìà  à13.à ` àInternet€content€providers€(ð ðÔ_ÔICPsÔ_Ôðð)€are€the€individuals€and€organizations€that€haveÐ  p Ðestablished€a€presence,€or€ð ðsite,ðð€on€the€Web€by€publishing€a€collection€of€Web€pages.€€MostÏWeb€pages€are€in€the€form€of€ð ðhypertextðð;€that€is,€they€contain€annotated€references,€orÏð ðhyperlinks,ðð€to€other€Web€pages.€€Hyperlinks€can€be€used€as€cross„references€within€a€singleÏdocument,€between€documents€on€the€same€site,€or€between€documents€on€different€sites.Ìà  à14.à ` àTypically,€one€page€on€each€Web€site€is€the€ð ðhome€page,ðð€or€the€first€access€pointÐ X ¨ Ðto€the€site.€€The€home€page€is€usually€a€hypertext€document€that€presents€an€overview€of€the€siteÏand€hyperlinks€to€the€other€pages€comprising€the€site.Ìà  à15.à ` àPCs€typically€connect€to€the€Internet€through€the€services€of€Internet€accessÐ à%0!$ Ðproviders€(ð ðÔ_ÔIAPsÔ_Ôðð),€which€generally€charge€subscription€fees€to€their€customers€in€the€UnitedÏStates.€€There€are€two€types€of€Ô_ÔIAPsÔ_Ô.€€Online€services€(ð ðÔ_ÔOLSsÔ_Ôðð)€such€as€America€OnlineÏ(ð ðAOLðð),€Prodigy,€and€the€Microsoft€Network€(ð ðÔ_ÔMSNÔ_Ôðð)€offer,€in€addition€to€Internet€access,Ð h+¸&* Ðvarious€services€and€an€array€of€proprietary€content.€€Internet€service€providers€(ð ðÔ_ÔISPsÔ_Ôðð)€such€asÏÔ_ÔMindSpringÔ_Ô€and€Ô_ÔNetcomÔ_Ô,€on€the€other€hand,€offer€few€services€apart€from€Internet€access€andÏrelatively€little€of€their€own€content.Ìà  à16.à ` àA€ð ðWeb€clientðð€is€software€that,€when€running€on€a€computer€connected€to€theÐ 8 ˆ ÐInternet,€sends€information€to€and€receives€information€from€Web€servers€throughout€theÏInternet.€€Web€clients€and€servers€transfer€data€using€a€standard€known€as€the€Hypertext€TransferÏProtocol€(ð ðHTTPðð).€€A€ð ðWeb€browserðð€is€a€type€of€Web€client€that€enables€a€user€to€select,Ïretrieve,€and€perceive€resources€on€the€Web.€€In€particular,€Web€browsers€provide€a€way€for€aÏuser€to€view€hypertext€documents€and€follow€the€hyperlinks€that€connect€them,€typically€byÏmoving€the€cursor€over€a€link€and€depressing€the€mouse€button.Ìà  à17.à ` àØ€ØAlthough€certain€Web€browsers€provided€graphical€user€interfaces€as€far€back€asÐ  p Ð1993,€the€first€widely„popular€graphical€browser€distributed€for€profit,€called€Navigator,€wasÏbrought€to€market€by€the€Netscape€Communications€Corporation€(ð ðNetscapeðð)€in€DecemberÏ1994.€€Microsoft€introduced€its€browser,€called€Internet€Explorer,€in€July€1995.Ø€Øò òÐ ¨ø ÐII.à  àTHE€RELEVANT€MARKETó óÐ €Ð Ðà  à18.à ` àCurrently€there€are€no€products,€nor€are€there€likely€to€be€any€in€the€near€future,Ð X ¨ Ðthat€a€significant€percentage€of€consumers€worldwide€could€substitute€for€Intel„compatible€PCÏoperating€systems€without€incurring€substantial€costs.€€Furthermore,€no€firm€that€does€notÏcurrently€market€Intel„compatible€PC€operating€systems€could€start€doing€so€in€a€way€that€would,Ïwithin€a€reasonably€short€period€of€time,€present€a€significant€percentage€of€consumers€with€aÏviable€alternative€to€existing€Intel„compatible€PC€operating€systems.€€It€follows€that,€if€one€firmÏcontrolled€the€licensing€of€all€Intel„compatible€PC€operating€systems€worldwide,€it€could€set€theÐ h+¸&* Ðprice€of€a€license€substantially€above€that€which€would€be€charged€in€a€competitive€market€andÏleave€the€price€there€for€a€significant€period€of€time€without€losing€so€many€customers€as€to€makeÏthe€action€unprofitable.€€Therefore,€in€determining€the€level€of€Microsoftððs€market€power,€theÏrelevant€market€is€the€licensing€of€all€Intel„compatible€PC€operating€systems€worldwide.ÌÝ‚ )ÞÿÝÝ  Ýò òà  àÝ‚ )Þk@ÝÚƒ ÚAÚ  Ú.à0 ` àÝ  ÝDemand€Substitutability݃ )Þk@•@ÝÛ€ یР`` (#` (# ÐŒÝ  Ýà  àà ` à1.à0 ¸ àServer€Operating€Systemsó óÐè 8 ¸ (#¸ (# Ðà  à19.à ` àConsumers€could€not€turn€from€Intel„compatible€PC€operating€systems€to€Intel„Ð À  Ðcompatible€server€operating€systems€without€incurring€substantial€costs,€since€the€latter€type€ofÏsystem€is€sold€at€a€significantly€higher€price€than€the€former.€€A€consumer€intent€on€acquiring€aÏserver€operating€system€would€also€have€to€buy€a€computer€of€substantially€greater€power€andÏprice€than€an€Intel„compatible€PC,€because€server€operating€systems€generally€cannot€functionÏproperly€on€PC€hardware.€€The€price€of€an€Intel„compatible€PC€operating€system€accounts€forÏonly€a€very€small€percentage€of€the€price€of€an€Intel„compatible€PC€system.€€Thus,€even€aÏsubstantial€increase€in€the€price€of€an€Intel„compatible€PC€operating€system€above€theÏcompetitive€level€would€result€in€only€a€trivial€increase€in€the€price€of€an€Intel„compatible€PCÏsystem.€€Very€few€consumers€would€purchase€expensive€servers€in€response€to€a€trivial€increaseÏin€the€price€of€an€Intel„compatible€PC€system.€€Furthermore,€a€consumer€would€not€obtain€aÏsatisfactory€substitute€for€an€Intel„compatible€PC€operating€system€even€if€he€purchased€a€server,Ïsince€server€operating€systems€lack€the€features€ð"ð€and€support€for€the€breadth€of€applications€ð"ðÏthat€induce€users€to€purchase€Intel„compatible€PC€operating€systems.Ð  ¸'#& ÐØ€ØÝ‚!.îÿÝÝ  Ýò òà  àà ` àÝ‚!.îGÝÚƒÚ2Ú  Ú.à0 ¸ àÝ  ÝNon„Intel„Compatible€PC€Operating€Systemsó ó݃!.îGEGÝۀیа¸ (#¸ (# ÐŒÝ  Ýà  à20.à ` àSince€only€Intel„compatible€PC€operating€systems€will€work€with€Intel„compatibleÐ ˆØ ÐPCs,€a€consumer€cannot€opt€for€a€non„Intel„compatible€PC€operating€system€without€obtaining€aÏnon„Intel„compatible€PC.€€Thus,€for€consumers€who€already€own€an€Intel„compatible€PC€system,Ïthe€cost€of€switching€to€a€non„Intel€compatible€PC€operating€system€includes€the€price€of€not€onlyÏa€new€operating€system,€but€also€a€new€PC€and€new€peripheral€devices.€€It€also€includes€the€effortÏof€learning€to€use€the€new€system,€the€cost€of€acquiring€a€new€set€of€compatible€applications,€andÏthe€work€of€replacing€files€and€documents€that€were€associated€with€the€old€applications.€€VeryÏfew€consumers€would€incur€these€costs€in€response€to€the€trivial€increase€in€the€price€of€an€Intel„¼compatible€PC€system€that€would€result€from€even€a€substantial€increase€in€the€price€of€an€Intel„¼compatible€PC€operating€system.€€For€example,€users€of€Intel„compatible€PC€operating€systemsÏwould€not€switch€in€large€numbers€to€the€Mac€OS€in€response€to€even€a€substantial,€sustainedÏincrease€in€the€price€of€an€Intel„compatible€PC€operating€system.Ìà  à21.à ` àThe€response€to€a€price€increase€would€be€somewhat€greater€among€consumersÐ ¨ø Ðbuying€their€first€PC€system,€because€they€would€not€have€already€invested€time€and€money€in€anÏIntel„compatible€PC€system€and€a€set€of€compatible€applications.€€Apple€does€not€license€the€MacÏOS€separately€from€its€PC€hardware,€however,€and€the€package€of€hardware€and€softwareÏcomprising€an€Apple€PC€system€is€priced€substantially€higher€than€the€average€price€of€an€Intel„¼compatible€PC€system.€€Furthermore,€consumer€demand€for€Apple€PC€systems€suffers€on€accountÏof€the€relative€dearth€of€applications€written€to€run€on€the€Mac€OS.€€It€is€unlikely,€then,€that€aÏfirm€controlling€the€licensing€of€all€Intel„compatible€PC€operating€systems€would€lose€so€manyÏnew€PC€users€to€Apple€as€the€result€of€a€substantial,€enduring€price€increase€as€to€make€the€actionÐ h+¸&* Ðunprofitable.€€It€is€therefore€proper€to€define€a€relevant€market€that€excludes€the€Mac€OS.€€In€anyÏevent,€as€Section€III€of€these€Findings€demonstrates,€including€the€Mac€OS€in€the€relevant€marketÏwould€not€alter€the€Courtððs€conclusion€as€to€the€level€of€Microsoftððs€market€power.Ìò òà  àà ` à3.à0 ¸ àInformation€Appliancesó óÐ8 ˆ¸ (#¸ (# Ðà  à22.à ` àNo€operating€system€designed€for€a€hand„held€computer,€a€ð ðsmartðð€wirelessÐ  ` Ðtelephone,€a€television€set„top€box,€or€a€game€console€is€capable€of€performing€as€an€adequateÏoperating€system€for€an€Intel„compatible€PC.€€Therefore,€in€order€to€adopt€a€substitute€for€theÏIntel„compatible€PC€operating€system€from€the€realm€of€ð ðinformation€appliances,ðð€a€consumerÏmust€acquire€one€or€more€of€these€devices€in€lieu€of€an€Intel„compatible€PC€system.Ìà  à23.à ` àIt€is€possible€that,€within€the€next€few€years,€those€consumers€who€otherwiseÐ H˜ Ðwould€use€an€Intel„compatible€PC€system€solely€for€storing€addresses€and€schedules,€for€sendingÏand€receiving€E„mail,€for€browsing€the€Web,€and€for€playing€video€games€might€be€able€toÏchoose€a€complementary€set€of€information€appliances€over€an€Intel„compatible€PC€systemÏwithout€incurring€substantial€costs.€€To€the€extent€this€substitution€occurs,€though,€it€will€be€theÏresult€of€innovation€by€the€producers€of€information€appliances,€and€it€will€occur€even€if€Intel„¼compatible€PC€operating€systems€are€priced€at€the€same€level€that€they€would€be€in€a€competitiveÏmarket.€€More€importantly,€while€some€consumers€may€decide€to€make€do€with€one€or€moreÏinformation€appliances€in€place€of€an€Intel„compatible€PC€system,€the€number€of€theseÏconsumers€will,€for€the€foreseeable€future,€remain€small€in€comparison€to€the€number€ofÏconsumers€deciding€that€they€still€need€an€Intel„compatible€PC€system.€€One€reason€for€this€is€theÏfact€that€no€single€type€of€information€appliance,€nor€even€all€types€in€the€aggregate,€provides€allÏof€the€features€that€most€consumers€have€come€to€rely€on€in€their€PC€systems€and€in€theÐ h+¸&* Ðapplications€that€run€on€them.€€Thus,€most€of€those€who€buy€information€appliances€will€do€so€inÏÔ_Ôaddition€to,€rather€than€instead€of,€buying€an€Intel„compatible€PC€system.€€Not€surprisingly,€then,Ïsales€of€PC€systems€are€not€expected€to€suffer€on€account€of€the€growing€consumer€interest€inÏinformation€appliances.€€It€follows€that,€for€the€foreseeable€future,€a€firm€controlling€the€licensingÏof€all€Intel„compatible€PC€operating€systems€could€set€prices€substantially€above€competitiveÏlevels€without€losing€an€unacceptable€amount€of€business€to€information€appliances.ÌØ€ØÝ‚!.îÿÝÝ  Ýò òà  àà ` àÝ‚!.îëZÝÚƒÚ4Ú  Ú.à0 ¸ àÝ  ÝNetwork€Computersó ó݃!.îëZ![ÝÛ€ÛŒÐÀ ¸ (#¸ (# ÐŒÝ  Ýà  à24.à ` àA€network€computer€system€(sometimes€called€a€ð ðthin€clientðð)€typically€containsÐ ˜è  Ðcentral€processing€components€with€basic€capabilities,€certain€key€peripheral€devices€(such€as€aÏmonitor,€a€keyboard,€and€a€mouse),€an€operating€system,€and€a€browser.€€The€system€contains€noÏmass€storage,€however,€and€it€processes€little€if€any€data€locally.€€Instead,€the€system€receivesÏprocessed€data€and€software€as€needed€from€a€server€across€a€network.€€A€network€computerÏsystem€lacks€the€hardware€resources€to€support€an€Intel„compatible€PC€operating€system.€€ItÏfollows€that€software€applications€written€to€run€on€a€specific€Intel„compatible€PC€operatingÏsystem€will€not€run€on€a€network€computer.€€Network€computers€can€run€applications€residing€onÏa€designated€server,€however.€€Moreover,€a€network€computer€system€typically€can€runÏapplications€residing€on€other€servers,€so€long€as€those€applications€are€accessible€through€WebÏsites.€€The€ability€to€run€server„based€applications€is€not€exclusive€to€network€computer€systems,Ïhowever.€€Generally€speaking,€any€PC€system€equipped€with€a€browser€and€an€InternetÏconnection€is€capable€of€accessing€applications€hosted€through€Web€sites.€Ìà  à25.à ` àSince€the€network€computing€model€relies€heavily€on€the€processing€power€andÐ )à$( Ðmemory€of€servers,€the€requirements€for€the€userððs€hardware€(and€thus€the€price€of€that€hardware)Ð h+¸&* Ðare€low€relative€to€those€of€an€Intel„compatible€PC€system.€€Still,€a€user€who€already€owns€aÏrelatively€expensive€Intel„compatible€PC€system€is€not€likely€to€abandon€the€investment€andÏacquire€less€powerful€hardware€just€because€one€of€the€least€expensive€components€of€his€PCÏsystem€ð"ð€the€operating€system€ð"ð€is€substantially€more€expensive€than€it€would€be€underÏcompetitive€conditions.€€Just€as€does€the€Mac€OS,€the€network€computing€model€presents€aÏsomewhat€more€attractive€alternative€to€the€first„time€computer€buyer.€€But€as€in€the€case€where€aÏprospective€purchaser€is€considering€acquiring€the€Apple€alternative,€a€new€buyer€considering€theÏnetwork€computing€model€must€choose€between€types€of€computer€systems.€€If€the€consumerÏopts€for€the€less€expensive€hardware€of€the€network€computer,€that€hardware€will€not€support€anÏIntel„compatible€PC€operating€system;€and€if€the€new€buyer€opts€for€the€more€expensiveÏhardware€of€an€Intel„compatible€PC,€an€Intel„compatible€PC€operating€system€will€almostÏcertainly€come€pre„installed€(and€in€any€event€represent€very€little€additional€cost€relative€to€theÏprice€of€the€hardware).Ìà  à26.à ` àOnly€a€few€firms€currently€market€network€computer€systems,€and€the€systemsÐ ¨ø Ðhave€yet€to€attract€substantial€consumer€demand.€€In€part,€this€is€because€PC€systems,€which€canÏstore€and€process€data€locally€as€well€as€communicate€with€a€server,€have€decreased€so€much€inÏprice€as€to€call€into€question€the€value€proposition€of€buying€a€network€computer€system.€€ThisÏfact€would€not€change€if€the€price€of€an€Intel„compatible€PC€operating€system€rose€significantly,Ïbecause€the€resulting€change€in€the€price€of€an€Intel„compatible€PC€system€would€be€very€minor.€ÏAnother€reason€for€the€limited€demand€for€network€computer€systems€is€the€fact€that€fewÏconsumers€are€in€a€position€to€turn€from€PC€systems€to€network€computer€systems€withoutÏmaking€substantial€sacrifices;€for€the€network€computing€option€exhibits€significantÐ h+¸&* Ðshortcomings€for€current€PC€owners€and€first„time€buyers€alike.€€The€problems€of€Ô_Ôlatency,Ïcongestion,€asynchrony,€and€insecurity€across€a€communications€network,€and€contention€forÏlimited€processing€and€memory€resources€at€the€remote€server,€can€all€result€in€a€substantialÏderogation€of€computing€performance.€€Moreover,€the€owner€of€a€network€computer€is€requiredÏto€enter€into€long„term€dependency€upon€the€owner€of€a€remote€server€in€order€to€obtainÏfunctionality€that€would€reside€within€his€control€if€he€owned€a€PC€system.€€If€networkÏcomputing€becomes€a€viable€alternative€to€PC„based€computing,€it€will€be€because€innovation€byÏthe€proponents€of€the€network€computing€model€overcomes€these€problems,€and€it€will€happenÏeven€if€Intel„compatible€PC€operating€systems€are€priced€at€competitive€levels.€€In€any€case,€thatÏday€has€not€arrived,€nor€does€it€appear€imminent.ÌÝ‚!.îÿÝÝ  Ýò òà  àà ` àÝ‚!.îmÝÚƒÚ5Ú  Ú.à0 ¸ àÝ  ÝServer„Based€Computing€Generallyó ó݃!.îm