updated 09:00 am EDT, Mon September 17, 2007
MS Loses EU Appeal
The European Court of First Instance today rejected Microsoft's appeal against a 2004 European Commission ruling that declared the company in violation of European anti-trust regulations. The decision upheld all major points of the decision, which claimed that the American software developer had shut out competitors by simultaneously limiting access to source code for its server software as well as by bundling Windows Media Player. The Court of First Instance in particular said there was no "objective justification" for requiring Windows Media Player's inclusion with the Microsoft operating system and argued that competitors such as RealNetworks were unable to challenge Microsoft's relative dominance of digital media.
As a result of the move, the software firm has been asked to make significant reparations demanded by the original EC ruling, which included a 497 million Euro ($690 million) fine, compensation for the court costs of the Free Software Foundation and other groups who disputed Microsoft in the case, as well as key changes to its software. If maintained, the original findings would have Microsoft provide relevant source code to immediate competitors in the server space and would bar any future version of Windows from shipping only with Windows Media Player pre-installed. Since the original ruling, Microsoft has offered "N" versions of Windows XP and Windows Vista for Europeans that strip out the company's media software.
Microsoft has up to two months to launch one more appeal with the European Court of Justice but has yet to say whether it will pursue this route. Company general counsel Brad Smith said it was too early to offer a definitive response, but noted that it would comply with any final decisions and that the climate surrounding the anti-trust case had changed dramatically since the very beginnings of the case in 1998, referring to a recent deal with Sun Microsystems to use Windows Server software and its licensing of disputed patents with Linux distributor Novell.
"The world has changed, the industry has changed, and our company has changed," Smith said. "We sought to underscore that over a year ago when we published what we described as our Windows® Principles, principles intended to ensure that future versions of Windows, starting with Windows Vista, would comport not only with the principles of U.S. law but with the principles that are applicable here in Europe as well."
Regardless of the effect of the appeal's rejection, EC competition commissioner Neelie Kroes declared the ruling "bittersweet," warning that Microsoft's monopoly of the European market had persisted since 2004. However, the court action gives permission to the EC to challenge Microsoft in other anti-trust cases and sets a precedent for other firms suspected of abusing their control on the continent, such as Intel and Rambus.