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A federal judge declared Friday that Microsoft Corp. possesses monopoly power in the market for PC operating systems and harmed consumers through its anti-competitive behavior, giving the government a pivotal victory in the long-running antitrust trial.

The findings represent a major setback to Microsoft, largely because U.S. District Judge Thomas Penfield Jackson rejected the company's defense that its actions have not harmed consumers.

In his findings of fact, Jackson said Microsoft (MSFT), which holds more than 90 percent of the market share for PC operating systems, caused "consumer harm by distorting competition."

"Three main facts indicate that Microsoft enjoys monopoly power," Jackson wrote. "First, Microsoft's share of the market for Intel-compatible PC operating systems is extremely large and stable. Second, Microsoft's dominant market share is protected by a high barrier to entry. Third, and largely as a result of that barrier, Microsoft's customers lack a commercially viable alternative to Windows.

"Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," Jackson added.

"The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest."

Justice Department officials hailed Jackson's findings as a major victory.

"This fully supports the [Justice] Department's view that this case is about protecting consumers," U.S. Attorney General Janet Reno said.

Joel Klein, head of the Justice Department's antitrust bureau, said the evidence proved that "Microsoft is a monopolist and it engaged in massive anti-competitive practices that harmed innovation and limited consumer choice."

For their part, Microsoft officials attempted to downplay Jackson's findings, noting that Friday's statements marked just the latest step in an ongoing process.

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