A federal court judge has determined that Microsoft holds a monopoly in the computer software industry, setting the stage for a possible legal verdict against the software company that dominates desktop computing.

District Court Judge Thomas Penfield Jackson today issued findings of fact that state Microsoft has used its monopoly power to engage in predatory actions against competitors and that consumers suffered as a result. While Jackson's findings are not a verdict in the year-old antitrust case brought against Microsoft by the federal government and 19 state attorneys general, Jackson's statements in the 207-page report are seen as highly unfavorable to Microsoft.

Government attorneys had argued that Microsoft holds a monopoly in PC operating systems and has acted illegally to extend that monopoly into other markets, particularly Internet browser software. After hearing further arguments from both sides, Jackson will decide whether these facts prove Microsoft violated antitrust laws. If so, the software company could face sanctions that range from fines to legal restrictions on its actions to a court-ordered breakup of the company.

"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 wrote. Under U.S. law, it is not illegal to establish monopoly power through skill or superior products, but it is illegal to use that dominance to hold or extend the monopoly.

Government officials called the ruling "a tremendous victory for America's consumers."