DEFINITION of 'Baby Bills'

A hypothetical nickname for the smaller companies that would have been formed if Microsoft had been broken up for violation of antitrust rules in 2000. Baby Bills stood a real chance of having actually been formed since the U.S. government did call for the company's breakup, but the decision was reversed the following year so Microsoft instead was permitted to keep operating as one company.


The antitrust suit in question was brought against Microsoft in 1993 after an investigation of possible collusion between Microsoft and IBM hit a dead end. The Justice Department settled with Microsoft in 1994 after documents signed by the company force them to agree not to "squelch" competition by creating operating system dominance. In 1997, the Justice Department filed a complaint that Microsoft had violated the decree by demanding that Internet Explorer be bundled with PCs in order to get a Windows 95 license. After years of trials and appeals, they were finally able to come to an agreement in 2001.

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