Antitrust Allegations
Announcing a product that does not exist to gain a competitive advantage is illegal via Section 2 of the Sherman Antitrust Act of 1890, but few hardware or software developers have been found guilty of it. The section requires proof that the announcement is both provably false, and has actual or likely market impact. False or misleading announcements designed to influence stock prices are illegal under United States securities fraud laws. The complex and changing nature of the computer industry, marketing techniques, and lack of precedence for these laws applied to the industry can mean developers are not aware their actions are illegal. The U.S. Securities and Exchange Commission issued a statement in 1984 with the goal of reminding companies that securities fraud also applies to "statements that can reasonably be expected to reach investors and the trading markets".
Several companies have been accused in court of using knowingly false announcements to gain market advantage. In 1969, The United States Justice Department accused IBM of doing this in the case United States v. IBM. After IBM's competitor Control Data Corporation (CDC) released their computer, IBM announced they planned to sell a more advanced computer soon—its System/360 Model 91. The announcement resulted in a significant reduction in sales of CDC's product. The Justice Department accused IBM of doing this intentionally because the System/360 Model 91 was not released until three years later. The practice was not called "vaporware" at the time, but publications have since used the word to refer specifically to it. Similar cases have been filed against Kodak film company, AT&T, and Xerox.
US District Judge Stanley Sporkin was a vocal opponent of the practice during his review of the settlement resulting from United States v. Microsoft in 1994. "Vaporware is a practice that is deceitful on its face and everybody in the business community knows it," said Sporkin. One of the accusations made during the trial was that Microsoft has illegally used early announcements. The review began when three anonymous companies protested the settlement, claiming the government did not thoroughly investigate Microsoft's use of the practice. Specifically, they claimed Microsoft announced its Quick Basic 3 program to slow sales of its competitor Borland's recently released Turbo Basic program. The review was dismissed for lack of explicit proof.
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