European Union court rejects Microsoft's appeal in historic case
The European Union's Court of First Instance handed Microsoft a major defeat on Monday, slapping down the software maker's appeal in three significant areas of the historic antitrust case brought by the European Commission.
In the closely watched case, which has dragged on since March 2004, the Luxembourg-based court upheld the Commission's findings that Microsoft abused its dominant position in the market.
The highlights:
Interoperability. The court agreed with the Commission that Microsoft was stifling competition by withholding certain technical specifications, or protocols, from rivals. The court also agreed that the Commission wanted Microsoft to share only the system protocols, and not its source code. After all, not everyone wants to be "like" Microsoft.
"The court rejects Microsoft's claims that the degree of interoperability required by the Commission is intended in reality to enable competing work group server operating systems to function in every respect like a Windows system and, accordingly, to enable Microsoft's competitors to clone or reproduce its products," the Court of First Instance stated in its decision.
The decision further noted that "the court considers that the Commission was correct to conclude that the work group server operating systems of Microsoft's competitors must be able to interoperate with Windows domain architecture on an equal footing with Windows operating systems if they are to be capable of being marketed viably--the absence of such interoperability has the effect of reinforcing Microsoft's competitive position on the market and creates a risk that competition will be eliminated."
Bundling. The court upheld the Commission's decision that Microsoft was bundling two products together--the Windows operating system and its Windows Media Player--as a means to lock out competition.
"The court considers that the factors on which the Commission based its conclusion that there was abusive tying are correct and consistent with Community law."
The decision was based on four factors, which, in court parlance, are as follows: the concerned company must have a dominant position in the market for the tying product (the Windows operating system, in this case); the tying product and tied product (Media Player) must be two separate products; consumers don't have a choice to obtain the tying product without the tied product; and the practice must foreclose competition.
"In respect of each of those factors, the court considers that the Commission's decision is well founded," the ruling said.
The fine. What about that megafine--the one for 497 million Euros, or $613 million that was part of the Commission's March 2004 order?
Microsoft is stuck with the bill.
"The Court finds that the Commission did not err in assessing the gravity and duration of the infringement and did not err in setting the amount of the fine. Since the abuse of the dominant position is confirmed by the Court, the amount of the fine remains unchanged at EUR 497 million," the court ruled.
Microsoft can appeal the court's decision to the Court of Justice of the European Communities. But the appeal is limited only to points of law.
Round three, anyone?
UPDATE:
Microsoft isn't yet ready to say whether it will seek an audience with the European Court of Justice, but one thing the software giant plans to do is comb through the full decision.
Microsoft's general counsel, Brad Smith, noted that while it was clear the court agreed with the Commission on a number of points, Microsoft appreciated that the court had sided with the software maker on the issue of the Commission using a monitoring trustee to help it evaluate the technicalities of the case, Smith said during a press conference in Europe.
"The court criticizes, in particular, the obligation imposed on Microsoft to allow the monitoring trustee, independently of the Commission, access to its information, documents, premises and employees and also to the source code of its relevant products. It observes that no limit in time is envisaged for the continuing intervention of the trustee," the court stated.
As a result, Microsoft is no longer holding the bill for all costs associated with the monitoring trustee.
And the court also reigned in the power of the trustee, finding the Commission has no authority to compel Microsoft to grant the trustee powers which the Commission is not authorized to confer on a third party.
Smith also said that Microsoft has been working hard to comply with the March 2004 order and that progress has been made. He added that he hopes the court's decision will bring further clarity to the issue of interoperability, as well.
Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn.
Specifically, Apple comes with Quicktime installed. Are they not guilty of the same thing that MS is with Media Player?
This whole thing is obviously just a way for a failing welfare state to extract money from a successful business. The United States needs to practice reprocity with the EU and other nations. Level the playing field so that all companies play by the same rules.
As a citizen and consumer, I like the way the court upheld the EC position in the interest of serving justice. Whether it is against Microsoft, Apple, or a European company is not at issue.
Will it happen? No. Apple is too small of a target and doesn't have the money that the EU wants.
If anyone thinks this is about anything other than money, then they are fooling themselves. The EU is only interested in the money from the fines, not actually 'helping' the citizens. They forced MS to put out Windows without WMP with it. The product didn't sell. The end users still bought the product with WMP.
If the citizens that the EU is supposed to be representing don't agree with the EU, then what is the EU for in the first place? All those monetary fines sure aren't going to the citizens- it's all going to internal processing and funding needs by the EU panel itself.
But yeah, Apple would be guilty as well. If you think about it, Ford is also guilty because they sell their cars in Europe complete with a steering wheel. There are other companies that make steering wheels too, but because they don't include them with your new Mustang, then the company is guilty of the same thing. It's exactly the same problem and they can start demanding money from pretty much any company they want to target.
I'm certainly glad we don't have the EU in the US deciding for us what companies can and cannot offer their customers.
You wanna sell in their sandbox? You do it by their rules, you you don't sell there.
Don't like it? Deal.
/P
The socialists are definitely on the march!
Note the US federal court found Microsoft guilty as well (except with a slap on the wrist for fine). Both EC and Court of First Instance (similar to the US federal court in 2000) have done an exceedingly thorough job of reasoning.
No need to bring in political arguments in to this. Stick to points that have merit on THIS case.
I think the article gets it right by suggesting that MS will now need an "audience" with the European Court of Justice. Europe works about as well as a medieval court.
Watch MS just shrug this off. A near BILLION dollar fine. Won't have an effect on them one bit, and they keep their dominant position. 90% of Europeans will still go out like lemmings for their new computers with Windows Blister. But heavens no, they're not a monopoly . . .
I suspect now the EC has the amunition to go after other American companies that have "special obligations" to play fair with competitors - if even in a dynamic and competitive marketplace.
This is one way to ensure that no one gets ahead of lackluster EU IT companies. Problem is, those very same companies that asked for help will now be in the crosshairs themselves.
MSFT got slapped for breaking the laws (again) - deal.
PS: I'm looking forward to see if MSFT actually opens up their Exchange and AD protocols as they'd just been ordered to :)
/P
Bundling. The court upheld the Commission's decision that Apple was bundling every product they own together--the Apple OSX system and its Itunes, Iphoto, Imovie, Igarage and safari--as a means to lock out competition.
There's no point in trying to squeeze a turnip. They know where the real money is and are going after that. Apple simply doesn't have the money the EU wants.
Yes, they are guilty of exactly the same things, and who knows- perhaps they will be next on the list, but I doubt it.
Sound far fetched. Its worth noting that Silverlight is cross-browser and available for on Macs from Microsoft, and they have some kind of agreement with Novell for a Linux version.
Now, you might think that Silverlight is going nowhere, but if you assume that it really does give Flash/Flex a run for its money, then MS could find itself in trouble again. If they have made it available Linux and Mac too, would that undermine any anti-trust action against them.
The Final Solution.
There must be some lower-paid skilled labor to be found in an estimated 12 million undocumented community. Have the Europeans pay for what they wish to have or develop their own - Tequila, if the French "wines" will not do.
Also, why does everyone feel that MS is out to ruin everything. I can understand not liking their software but it seems as if a lot of people hear feel that the company purposely trys to make bad software. If this is a business discussion, is the goal not to be the best in your business?
Meanwhile in troubleshooting a problme I'm having on a Vista computer I failed to "validate" which was a big PITA since the software is all legit.
MS business practice has moved from competing to controlling.
The only sensible solution is for the EU to force hardware manufacturers to allocate a portion of the harddrive (10% is plenty) to an alternate O/S in dual boot mode. Dell is already doing this on some of their computers. Problem solved. No more monopoly and rampant competition.
It just isn't feasable.
Remember it took Europe a full 3 years to decide the definition of "mineral water" and that was even without any real period of comment from the public.
So the real solution is make sure that MS does not punish computer makers for giving people options. Computer makers themselves will decide what the users want as far as OS options.
Both iTunes and Rhapsody are much more succesful than any MS offering. It seems that a fair marketplace existed all along for media players and that has nothing to do with European meddling.
As for servers, perhaps Europe should now try and protect poor Sun Microsystems against the onslaught of Linux. Linux does very well against MS on servers and may yet prevail. Nothing the courts have today will change this. It will be decided by IT staffs around the world based on the value of each platform.
Europe you should be ashamed!
Tech, Pharma, Aerospace
The EU seems to have a knife out for any of the companies that have a significant impact on the US GDP.
Its a common misconception that if a company has a profit of X then we as people have X less. Its a synergistic system, any many oversimplify and don't understand the complexities.
We have a trade deficit that we can only make up if we sell more to Europe and the rest of the world than they sell to us. They know this and they want to hurt us. Its an unfair game. Just look at the illegal funding of the EU on Airbus, it cause Boeing significant damage.
In the same way, all the European hubbub over Apple's strategy regarding the iPod and iTunes is nonsense. Again, Apple saw a golden opportunity that no one else did and created a successful product. Don't like it? Make something better that consumers will like. Don't rely on your courts to remedy you for your strategic blunder.
I don't know what the problem is - all I'm reading is "boo hiss it's all anti-american"... all they're trying to do is level the playing field so that third-party providers e.g. Real and other operating systems e.g. Linux can have access to markets that Microsoft had more or less sewen up.
Hats off to the EU guys for having the balls to stand up to major employer, Microsoft could easily decide to relocate and that's a risk they are prepared to take, I'd much rather live in a fair society than a plutocracy.
- Media Player?
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by o2mcgovem-20822100750713932708
September 18, 2007 8:11 AM PDT
- To be honest, Microsoft had it coming.
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(42 Comments)Although, I don't get the Media Player thing... Apple iTunes is the most popular media player, so why would they say WMP is locking out competition?