What is 'Baby Bills'

Baby Bills is a potential nickname for the smaller companies Microsoft would have been broken into if Microsoft had been forced to dissolve after having been found guilty of violating antitrust laws in 1999. In 2000 a judge ordered Microsoft to break apart into smaller companies, but an agreement was reached in 2001 that allowed Microsoft to stay intact as a single company. The phrase Baby Bills was a portmanteau of Baby Bells and Bill Gates.


Baby Bills is a joke nickname for the companies software giant Microsoft would have been required to split up into had the antitrust order of June 7, 2000 stood. In 1992, the Federal Trade Commission (FTC) began an investigation into whether Microsoft had a monopoly on operating systems for PC computers. In 1993 the FTC deadlocked on whether Microsoft had abused its monopoly, but at the same time the Department of Justice, referred to as DOJ or Justice, opened its own investigation into Microsoft as a monopoly and whether or not the company was exploiting the monopoly. In 1994 Justice ruled that Microsoft was not allowed to attach other Microsoft products to the MS operating system. In essence Justice was trying to limit Microsoft's monopoly power only to the operating system and prevent it from achieving monopolies in other types of products. Microsoft was in the process of developing de facto monopolies in word processing and spreadsheet software as other products were losing market share, and Justice was attempting to mitigate this.

Microsoft continued to bundle Internet Explorer along with the MS operating system and claimed that it was a feature and not a product. The DOJ and 21 Attorneys General sued Microsoft for this, and the trial began in 1998. In 1999 Microsoft was found guilty of having and abusing a monopoly. On June 7, 2000 Microsoft was ordered to break up into smaller companies, one of which would have contained the operating systems, one of which would have contained software applications and a third of which would have had internet and ecommerce systems. These hypothetical companies were referred to as Baby Bills. In 2001 Microsoft reached an agreement with the DOJ to open up its programming interfaces to third-party companies to develop software for the MS operating system. Microsoft was not forced to break up into smaller companies.

Meaning of ‘Baby Bills’

Baby Bills is a portmanteau of the phrase Baby Bells, which refers to the smaller companies formed when the AT&T telephone monopoly, called "Ma Bell," was ordered to disband in 1982, and Bill Gates, CEO and founder of Microsoft.

  1. Monopoly

    A monopoly is a situation in which one corporation, firm or entity ...
  2. Natural Monopoly

    A natural monopoly is the domination of an industry or sector ...
  3. Legal Monopoly

    A legal monopoly is a company that is operating as a monopoly ...
  4. Price Maker

    A price maker is an entity with a monopoly that has the power ...
  5. Discriminating Monopoly

    A discriminating monopoly is a market-dominating company that ...
  6. Bilateral Monopoly

    A bilateral monopoly exists when a market consists of one buyer ...
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