Microsoft released Microsoft Windows on November 20, 1985, as a graphical extension for MS-DOS,

[16]: 242–243, 246  despite having begun jointly developing OS/2 with IBM the previous August.[31]
Microsoft moved its headquarters from Bellevue to Redmond, Washington, on February 26, 1986, and
went public on March 13,[32] with the resulting rise in stock making an estimated four billionaires and
12,000 millionaires from Microsoft employees.[33] Microsoft released its version of OS/2 to original
equipment manufacturers (OEMs) on April 2, 1987.[16] In 1990, the Federal Trade Commission
examined Microsoft for possible collusion due to the partnership with IBM, marking the beginning of
more than a decade of legal clashes with the government.[34] : 243–244  Meanwhile, the company was
at work on Microsoft Windows NT, which was heavily based on their copy of the OS/2 code. It shipped
on July 21, 1993, with a new modular kernel and the 32-bit Win32 application programming interface
(API), making it easier to port from 16-bit (MS-DOS-based) Windows. Microsoft informed IBM of
Windows NT, and the OS/2 partnership deteriorated.[35]

In 1990, Microsoft introduced the Microsoft Office suite which bundled separate applications such as
Microsoft Word and Microsoft Excel.[16]: 301  On May 22, Microsoft launched Windows 3.0, featuring
streamlined user interface graphics and improved protected mode capability for the Intel 386 processor,
[36] and both Office and Windows became dominant in their respective areas.[37][38]

On July 27, 1994, the Department of Justice's Antitrust Division filed a competitive impact statement
which said: "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced many OEMs to
execute anti-competitive 'per processor' licenses. Under a per-processor license, an OEM pays Microsoft
a royalty for each computer it sells containing a particular microprocessor, whether the OEM sells the
computer with a Microsoft operating system or a non-Microsoft operating system. In effect, the royalty
payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax, on the OEM's
use of a competing PC operating system. Since 1988, Microsoft's use of per processor licenses has
increased."[39]

1995–2007: Foray into the Web, Windows 95, Windows XP, and Xbox

In 1996, Microsoft released Windows CE, a version of the operating system meant for personal digital
assistants and other tiny computers.

Following Bill Gates' internal "Internet Tidal Wave memo" on May 26, 1995, Microsoft began to redefine
its offerings and expand its product line into computer networking and the World Wide Web.[40] With a
few exceptions of new companies, like Netscape, Microsoft was the only major and established
company that acted fast enough to be a part of the World Wide Web practically from the start. Other
companies like Borland, WordPerfect, Novell, IBM and Lotus, being much slower to adapt to the new
situation, would give Microsoft a market dominance.[41] The company released Windows 95 on August
24, 1995, featuring pre-emptive multitasking, a completely new user interface with a novel start button,
and 32-bit compatibility; similar to NT, it provided the Win32 API.[42][43]: 20  Windows 95 came
bundled with the online service MSN, which was at first intended to be a competitor to the Internet,
[dubious – discuss] and (for OEMs) Internet Explorer, a Web browser. Internet Explorer was not bundled
with the retail Windows 95 boxes, because the boxes were printed before the team finished the Web
browser, and instead was included in the Windows 95 Plus! pack.[44] Backed by a high-profile marketing
campaign[45] and what The New York Times called "the splashiest, most frenzied, most expensive
introduction of a computer product in the industry's history,"[46] Windows 95 quickly became a success.
[47] Branching out into new markets in 1996, Microsoft and General Electric's NBC unit created a new
24/7 cable news channel, MSNBC.[48] Microsoft created Windows CE 1.0, a new OS designed for devices
with low memory and other constraints, such as personal digital assistants.[49] In October 1997, the
Justice Department filed a motion in the Federal District Court, stating that Microsoft violated an
agreement signed in 1994 and asked the court to stop the bundling of Internet Explorer with Windows.
[16]: 323–324 

Microsoft released the first installment in the Xbox series of consoles in 2001. The Xbox, graphically
powerful compared to its rivals, featured a standard PC's 733 MHz Intel Pentium III processor.

On January 13, 2000, Bill Gates handed over the CEO position to Steve Ballmer, an old college friend of
Gates and employee of the company since 1980, while creating a new position for himself as Chief
Software Architect.[16]: 111, 228 [20] Various companies including Microsoft formed the Trusted
Computing Platform Alliance in October 1999 to (among other things) increase security and protect
intellectual property through identifying changes in hardware and software. Critics decried the alliance
as a way to enforce indiscriminate restrictions over how consumers use software, and over how
computers behave, and as a form of digital rights management: for example the scenario where a
computer is not only secured for its owner, but also secured against its owner as well.[50][51] On April
3, 2000, a judgment was handed down in the case of United States v. Microsoft Corp.,[52] calling the
company an "abusive monopoly."[53] Microsoft later settled with the U.S. Department of Justice in
2004.[32] On October 25, 2001, Microsoft released Windows XP, unifying the mainstream and NT lines
of OS under the NT codebase.[54] The company released the Xbox later that year, entering the video
game console market dominated by Sony and Nintendo.[55] In March 2004 the European Union brought
antitrust legal action against the company, citing it abused its dominance with the Windows OS,
resulting in a judgment of €497 million ($613 million) and requiring Microsoft to produce new versions
of Windows XP without Windows Media Player: Windows XP Home Edition N and Windows XP
Professional N.[56][57] In November 2005, the company's second video game console, the Xbox 360,
was released. There were two versions, a basic version for $299.99 and a deluxe version for $399.99.[58]