Antitrust battle: Microsoft loses appeal of EU fine; mulling its next move

Microsoft's Senior Vice President Brad Smith said the EU's insistence on penalizing Microsoft raises concerns about the protection of trade secrets. He also questioned whether the EU is consistent in considering perceived monopolies, since companies like IBM, Apple, and Google control large portions of their respective markets in Europe.  

By Press Association, Europe September 18, 2007

Microsoft is considering a last-ditch appeal after losing the latest round in a marathon legal battle with the European Commission.

The European Court of First Instance in Luxembourg – the EU’s second-highest court – threw out Microsoft’s attempt to overturn a record

The world’s largest computer software company has two months to decide whether to take the case to the European Court of Justice.

Microsoft Senior Vice President Brad Smith told a press conference in Brussels on Monday that

Microsoft’s Windows operating system is used in about 90 percent

That means selling Windows without the obligatory Microsoft Media Player software, and providing rivals with crucial communications codes to enable them to market compatible software to Media Player.

In 2004, the Commission handed down its biggest single fine yet, accusing Microsoft of failing to comply, and thereby breaching EU rules outlawing abuses of a dominant commercial position.


Competition Commissioner Neelie Kroes said the result backed more consumer choice and set an important precedent obliging dominant companies to allow competition, particularly in high-tech industries.

Commission President Jose Manuel Barroso added: “This judgment confirms the objectivity and credibility of the Commission’s competition policy, which protects European consumer interest and ensure fair competition between business in the internal market.”

The Software and Information Industry Association said the ruling was “a victory for innovators and consumers everywhere” and challenged Microsoft to open up its sales monopoly and provide the technical data for rivals to offer Windows-compatible software.

The Centre for Economic Performance commented: “First, by illegally bundling Windows Media Player into its ubiquitous Windows operating system, Microsoft has driven rival media player firms out of the market.

“Second, by refusing to provide critical technical information about Windows, it has severely disadvantaged rival manufacturers who needed this information to make their server operating systems run smoothly with Windows-dominated personal computer operating systems.”

But the Computing Technology Industry Association countered that the judgment was “a significant blow to free enterprise in Europe”.

The association’s anti-trust counsel, Lars Liebeler, went on: “This decision encourages competitors to bring legal action against each other rather than compete aggressively in the marketplace.

“The decision will drive away innovative firms that succeed in the market by threatening them with confiscation of their intellectual property.”

The judgment reduced incentives for investment in product research and development, he said.

Microsoft’s Brad Smith said the issue raised concerns about the protection of trade secrets and he pointed out that, in the monopoly stakes, IBM had “99 percent

But he said Microsoft was prepared to “take new steps to broaden inter-operability partnerships”, and cooperate with the Commission in trying to adjust the prices Microsoft charged for access to the communications protocols’ required by other firms to produce software fully compatible with the Windows operating system.

And he vowed the growth in Microsoft investment in European technology research and development – running at around

Meanwhile, Windows would continue to be sold as a package with Media Player software – but customers would also be able to buy Windows separately if they wished.

Asked about the possibility of a last appeal, he said the company was still studying the judgment details, and had up to two months to decide what to do next.