Microsoft Loses Appeal

The 13 judges of the Court of First Instance, led by Bo Vesterdorf -- on his last day on the job -- upheld a European Commission order from 2004 and a resulting fine of 497 million euros ($688.84 million) for the software giant.

The court said Monday, Sept. 17, that the commission was correct in concluding that Microsoft was guilty of monopoly abuse and took advantage of its dominance in the desktop computer market to bundle other products with the ubiquitous Windows operating system.

"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," the court 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 relevant."

An ongoing saga

Microsoft is likely to lodge an appeal with the Europe's highest tribunal, the European Court of Justice, and prolong the saga for at least another year. Immediately after the court's decision was announced, however, Microsoft's general counsel refused to speculate on this issue.

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

The EU Commission ruled in 2004 -- after a five-year probe -- that Microsoft was abusing its 95-percent share of the computer operating system market.

The commission ordered the US-based multinational corporation to sell a version of their flagship Windows operating system without a media player and to share technical information with competitors so that they could more easily create Windows-compatible programs.

Calling the ruling an "important precedent," EU Competition Commissioner Neelie Kroes said she wanted to see Microsoft quickly changes its business practices and "comply fully" with the court's judgment.

"The Commission will do its utmost to ensure that Microsoft complies swiftly ... I will not tolerate continued noncompliance," she said.

EU scores an important victory

In its appeal, Microsoft argued that it provided interoperability information that met current industry standards and that the commission was asking from it to divulge valuable trade secrets and copyrighted patents.

The court's unequivocal ruling against Microsoft, however, may have important implications for the future operation of the global IT industry.

It is also an important validation for the European antitrust regulator, which prosecutes an increasing number of cases every year.

European Commission President Jose Manuel Barroso said the ruling "confirms the objectivity and the credibility" of the EU's approach to competition.

In 2006, the EU Competition Commission cached in a record amount of 1.85 billion euros in antitrust fines. According to EU officials, the commission levied the same amount of fines against cartels in the first half of 2007 alone.