Microsoft Loses EU Antitrust Appeal

Competition Commissioner Urges Software Giant To Pay Fine, Share Code Immediately

(CBS/AP)  A European Union court on Monday squashed Microsoft Corp.'s legal challenge to a landmark antitrust ruling and record fine, a resounding victory for the EU that confirms its role as a major global regulator.

The European Court of First Instance dismissed the software giant's appeal of the EU order that ordered it to share communications code with rivals and sell a copy of Windows without Media Player.

Soon after the ruling, EU Competition Commissioner Neelie Kroes urged Microsoft to "comply fully" with the 2004 antitrust ruling.

"The court upheld a landmark Commission decision to give consumers more choice in software markets," Kroes said in a statement. "Microsoft must now comply fully with its legal obligations to desist from engaging in anticompetitive conduct. The Commission will do its utmost to ensure that Microsoft complies swiftly.''

The court upheld a $613 million fine against Microsoft - the largest ever levied by EU regulators.

Microsoft Corp. said losing its legal challenge meant it may "need to take additional steps" to comply with European Commission requirements that it share communications code with rivals.

Microsoft general counsel Brad Smith said the company had not yet made a decision whether to appeal the ruling to the EU's highest court but stressed that Microsoft had tried to absorb the central message from the 2004 ruling that found it guilty of monopoly abuse. He said the court ruling was "not what we would have hoped for" but provided the company with some new clarity.

The court ruled against Microsoft on both parts of the case, saying the European Commission was correct in concluding that Microsoft was guilty of monopoly abuse in trying to use its power over desktop computers to muscle into server software.

Redmond, Washington-based Microsoft said it would withhold any comment on the decision or whether it would appeal the EU's highest court, the European Court of Justice - it has two months to do so - until it had gone through the 248-page ruling.

"I don't want to talk about what will come next," said Microsoft lawyer Brad Smith about the possibility of an appeal. "We need to read the ruling before we make any decision."

Speaking outside the room where the ruling was issued, Smith sounded conciliatory, however, saying, "we look forward to complying with today's decision."

He reiterated that Microsoft "will remain committed to Europe," saying it has more than tripled its number of employees here since the late 1990s and increased its research and development efforts from US$3 million to almost US$500 million (euro360.8 million)

The Commission immediately said it welcomed the ruling, without giving details.

The EU court also said regulators had clearly demonstrated that Microsoft's selling of media software with Windows had hurt rivals.

"The court observes that it is beyond dispute that in consequence of the tying consumers are unable to acquire the Windows operating system without simultaneously acquiring Windows Media Player," it said.

"In that regard, the court considers that neither the fact that Microsoft does not charge a separate price for Windows Media Player nor the fact that consumers are not obliged to use that Media Player is irrelevant."

Thomas Vinje, a lawyer for the European Committee for Interoperable Systems - an industry group that includes Microsoft rivals Sun Microsystems Inc., IBM Corp. and Oracle Corp. - heralded the decision as a door opener for "dynamic competition in the software industry."

"No more blaming the Commission for lack of clarity nor more excuses about complexity," Vinje said. "The provision of interoperability information is common software industry practice. Microsoft knows full well what is required and how to provide it and now just needs to do it."

Microsoft supporters, however, hinted that the decision would hamper software and technology development among European nations.

"This is an unfortunate day for consumers," said Lars Liebeler, a lawyer for CompTIA, an association of information technology companies that supports Microsoft.

"The EU will now be operating under a different legal rule," he told The Associated Press. "This causes great confusion to the marketplace."

He said Microsoft's extraordinary commercial success resulted from providing consumers with good products. "It should not be penalized for that."

Jonathan Zuck, president of Association for Competitive Technology, said the ruling could be seen as threatening to companies in other fields.

"The decision on the Media Player opens a dangerous precedent for other companies and sectors," he said. "Airbus should start worrying about adding new features to its planes. This decision marks the start of a dark period for ICT companies - large or small - with a high degree of uncertainty around the protection of their intellectual property. The precedent will threaten the ability of any successful company to protect its innovations."

Microsoft did get a small victory, as the court overturned the regulators' decision to appoint a monitoring trustee to watch how the company had complied with the ruling. The court said the Commission had exceeded its powers by ordering Microsoft to pay for all the costs of the trustee.

In its ruling, the court upheld both the Commission's argument and its order for Microsoft to hand over information on server protocols to rivals. Microsoft had claimed these were protected by patents and the Commission was forcing it to give away valuable intellectual property at little or no cost.

The court confirmed "that the necessary degree of interoperability required by the Commission is well founded and that there is no inconsistency between that degree of interoperability and the remedy imposed by the Commission."

[drsimonson]

By the way, I am appalled at the responses from my American brothers and sisters. I have been living in Europe for 4 years. Americans do not have the market cornered on arrogance. Europeans are plenty arrogant at times. Americans just have a monopoly on vulgarity. If you want to be seen in a better light by the rest of the world, learn to write without using name calling, vulgarity and profanity. Then your intelligence will actually show.

Sorry for going off topic, but I needed to vent.

[drsimonson]

I suppose KFC will soon be forced to provide it''s secret recipe to its competitors. The Two Fat Ladies were correct when they said that, "The only good thing to come out of Brussels is the odd chocolate."

Just because a computer comes bundled with software doesn''t mean you have to use it. If my last computer had come bundled with Red Hat or Ubuntu, I would have been nearly as happy as I am with Windows. As far as I can tell, the only advantage to Windows as your OS is that you have really good games written for that OS. Firefox is free, Thunderbird, Sunbird, OpenOffice. The list of free, excellent software is huge. If you don''t like MS products, the equally good freebies are out there. Use them!

The problem isn''t that Microsoft has the greatest share of the market, nor is it that they don''t share their code, nor is it that they bundle various software together with no additional charge. The real problem is that they were allowed to make exclusive deals with retailers to load their software onto every computer the retailer sells. I don''t really like the idea of legislating something that invasive, however it is the only fair way to put competition back on a level playing field. Let competition take its course. For every computer sold, the retailer gives you a choice of what OS and software you want. Then whoever comes out on top wins. That is what competition is.

[p-syrus]

It''s a sad state of affairs when american citizens have to rely on European governments to provide protection from criminal monopolistic u.s. corporations.

Adding insult to injury, the bush administration JUSTICE department has already issued a protest for fear of the harmful effects of the EU ruling on LARGE U.S. CORPORATIONS.

"Private citizens be d@amned!" say the bushies."We are big government and we are here to protect BIG business."

[Syndicate]

The EU should have done us all a favor and simply set an OS standard. With a standard any one could write an OS. Without an OS standard we are left to look to MS and Apple for OS''. If we had a standard for OS'' then We could choose between all sorts of diffrent ones based on the features of that OS. I would not have to woory that this software won''t work with that OS since they would all be built to a universal standard.

[fredcs25]

The European countries are only after Microsoft because they do not have the knowhow or smarts to compete in a fair market.

[michellem99-2009]

I an just a home user in the states..would a brit or someone over the pond why the firefight with MS . You have to have an OS on the computer..What is the problem with the media player..Do tell...

[red1530]

pwrslm the EU is going after Apple as well

[socrates392]

This is not just a challenge against Microsoft.

The E.U. is making their move against American patent laws. They are actually challenging their laws against ours!

Microsoft should back out of anything to do with the E.U. until these two entities have come to terms.

The problem is, M.S. will now be used for expense purposes by both sides until the matter is settled.

Posted by Spectrum108 at 11:37 AM : Sep 17, 2007

There is way too much money to be made selling windows to the European market. You and a lot of the people posting here seem to have forgotten that Microsoft is a greedy corporation. Corporations don''t act according to laws or principles. Profit is the bottomline.

And, honestly, if the EU has different patent laws than th US, why shouldn''t they uphold them? Are they not a sovereign entity? I wasn''t aware that the US got to dictate EU patent law?!

[elichez1]

Actually, ken79 is correct, I stand down.

[elichez1]

Ahhhhh, F the EU! Their lucky they are all not speaking German as it is. I hope Microsoft give them the middle finger and brings their systems to a screaching halt.