September 14, 2007 10:49 AM PDT

An anxious wait for EU court ruling on Microsoft

After a three-year legal battle, the European Union's Court of First Instance is set to rule Monday on EU regulators' antitrust case against Microsoft.

Because the ruling will have significant implications for consumers, computer makers, Microsoft's competitors and the ability of the European Commission to regulate technology companies, the stakes are unusually high.

The main topics of interest are expected to be decisions relating to two issues raised by the Commission's March 2004 order against Microsoft, which included a $613 million fine and determinations that the company engaged in a number of anticompetitive practices.

One issue to be addressed by the court deals with whether Microsoft stifled competition by bundling its Media Player with Windows, the market's dominant operating system. The other issue focuses on whether Microsoft provided adequate interoperability protocol information to competitors.

If the court hands the Commission an overwhelming defeat on both the interoperability and Media Player issues, the Commission could find itself neutered, say legal experts.

In recent years, the Commission has aggressively pursued or investigated other technology industry titans, including chipmaker Intel, which faced allegations the company wooed customers with marketing dollars in exchange for their exclusive use of Intel chips. The Commission also took on mobile-phone chipmaker Qualcomm over antitrust issues surrounding its patents for its 3G chipsets, and recently began an antitrust review of Google's proposed $3.1 billion acquisition of online ad company DoubleClick.

Given the Commission's fearlessness in taking on major technology companies over competitive issues, a major defeat in court may leave it with the "wind taken out of its sails," noted Thomas Vinje, an antitrust attorney with Clifford Chance in Europe. The Commission, as a result, may temper the pace and energy with which it pursues cases, he noted.

But should the Commission soundly defeat Microsoft, legal observers say, it's doubtful European regulators will suddenly go on a rampage and pursue marginal antitrust cases.

"The effect of a really big loss would be greater than the effect of a really big win for the Commission," Vinje said.

The $613 million fine called for in the March 2004 order was increased by $357 million last year, after the Commission alleged the software giant had not complied with its original ruling. The Court of First Instance will also issue a decision on the multimillion-dollar fines.

The court's decision is also expected to have some effect on the Commission's view toward other Microsoft products it is currently investigating, such as the Vista operating system, said Michael Reynolds, an antitrust attorney with Allan & Overy in Europe. The software giant announced in October that it made changes to Vista to accommodate concerns raised by antitrust regulators in Europe and South Korea.

"There already has been some intervention by the Commission," Reynolds said. "But everyone wants to see what the court says, before (finalizing) negotiations with the Commission."

While the court's ruling may have an effect on how antitrust cases are addressed by the EC, one legal expert said it is unlikely Google, Intel, Rambus or Qualcomm will be affected by the Microsoft decision next week.

Google's market share is far lower than that of Microsoft and no barriers exist to prevent users from migrating to another search engine, said Maurits Dolmans, an antitrust attorney with Cleary Gottlieb Steen & Hamilton in Europe.

And while Intel chips are in a majority of all computers, it has a rival, Advanced Micro Devices, and allegations that the chipmaker engaged in predatory pricing in Europe are far different from the issue Microsoft is facing over bundling its Media Player and the interoperability of its server protocols, said Dolmans.

Nonetheless, antitrust attorneys say the decision will be closely watched by a number of parties, from high-tech companies to the legal community to other antitrust agencies around the world.

"As a practical matter, I think a lot of the smaller competition jurisdictions will put a lot of weight behind what the Court of First Instance does," said Chris Compton, an antitrust attorney with Wilson Sonsini Goodrich & Rosati. "Korea and Japan may either feel emboldened to take action against companies like Microsoft or Intel, or it will constrain them."

As a result, Compton noted, the decision by the Court of First Instance is expected to the most closely watched antitrust decision on a global scale.

"This is a decision," said Compton, "that will have hundreds, if not thousands, of lawyers who'll want to take it apart."

See more CNET content tagged:
antitrust, commission, Thomas Vinje, antitrust case, European Union

17 comments

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You win some (battles) and you lose (battles)...
... (economic "battles" these are meant to be) The questions are: When will "AIRBUS 380" fly; and, the Silent "Concorde" fly again - economically and competitively! To get the point of this argument - it is all about "competing", "competition" and the "freedom to innovate"!
Posted by Commander_Spock (3123 comments )
Reply Link Flag
The "stupidity" of...
.... of the entire case against The Microsoft Corporation is - who in their right mind would wish to go after a company whose products are not International Organisation for Standardisation (ISO) approved. To have a airplane fly in the air then those parts have just got to confirm to international standards during manufacture... So, is there a double standards for computer software!
Posted by Commander_Spock (3123 comments )
Link Flag
Now, here is it that France....
... did not support the American Forces in the "Battle For Iraqi Freedom" and victory is in sight for the gallant fighting forces of America; now, these are not what you call "cry babies" - they have "innovated" (to protect their combatants) and are getting the job done and some are about to return home. When will "some" in Europe ever learn that in life there are times you have to lead, follow the leaders; or, drop out of the race all together.
Posted by Commander_Spock (3123 comments )
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Has the EU Court.....
... any philosophy? One of the Amendments To The Constitution of the United States is as follows:

"Amendment 5 - Trial and Punishment, Compensation for Takings. Ratified 12/15/1791.

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

<a class="jive-link-external" href="http://www.usconstitution.net/const.html#Am5" target="_newWindow">http://www.usconstitution.net/const.html#Am5</a>

This case could be as simple as this - Microsoft's competitors around the world should pay for what they wish from the U.S. company; or, develop their own technologies and compete as grown-ups and not be like "cry babies" Shee....ssh!
Posted by Commander_Spock (3123 comments )
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It's not that simple.
People are just so use to Microsoft's monopoly that they just don't realise that they are being ripped off because they have nothing to compare it to.

The point is that Microsoft gained it's monopoly illegally and it is doubtful that they would be a monopoly if they hadn't broken the law by cutting out other competitors with exclusive deals and strong arming companies to not use competitors products.

The damage is done now, but that doesn't mean that we give in to the idea that crime pays. Microsoft should be severely punished for the money, tech, and market that they have gained unlawfully.

Ultimately it is the customer that has lost out. The OS is very expensive and up to 50% of the price of a computer, yet it use to be about 10%.

Hardware has come down substantially because there is competition and the consumer benefits. But in the OS market, the consumer has lost out.

In the next OS market, namely mobiles, there is plenty of competition and that is good for us the consumer. Imagine if the OS in your cell phone cost was 50% of the cost?

The future isn't Windows it is Internet services delivered to any device, but Microsoft should be fined for breaking the law. Just because it was the past, doesn't mean that they can get away with it.
Posted by t8 (3716 comments )
Link Flag
Overstatement
The article overstates the importance of this case. It is a case carefully considered by the European Commission (EC), deliberated and "punishment" imposed. Microsoft tried to play it in the media and the EC was smart enough not to fall for that, and feisty enough to get more attention than MS did in this case. I very much think the court will go along with the EC in the interests of justice. If they don't, Justice itself gets hurt -- and I certainly hope they are not as spineless as the US DoJ under the current administration. Besides, Europe has nothing to lose and a lot to gain by letting the fines stick.
Posted by BobZune (5 comments )
Reply Link Flag
Isn't it ironic....
... paradoxical (whatever) that on this very CNET NEWS page there is an article headlined "SCO Group files for bankruptcy protection"

<a class="jive-link-external" href="http://www.news.com/8301-13580_3-9778778-39.html" target="_newWindow">http://www.news.com/8301-13580_3-9778778-39.html</a>

this coming after "Three and a half years after launching a high-profile legal attack on Linux". So, the question that comes to mind is -- If Linux (LINUX, UNIX, MAC, OS/2...) are that good (better according to some claims go) as to be alternatives to the Windows Operating Systems then why not use them; and, do these not make the case against the U.S. based Microsoft Corporation appear to be hypocritical and freeloading (blood-sucking)!
Posted by Commander_Spock (3123 comments )
Reply Link Flag
I fail to see your point
What does comparing SCO's overpriced products to Linux, et al, have to do with Windoze and M$'s anticompetitive, monopolistic practices?

Linux provided competition to SCO in the small niche market, which the courts (both in the US and in the EU) ruled is not large enough to relieve M$ of the burden of being a monopoly and the regulations associated therewith.
Posted by dvthex (18 comments )
Link Flag
"Samba Server for OS/2 & eComStation ΒΆ"
<a class="jive-link-external" href="http://svn.netlabs.org/samba" target="_newWindow">http://svn.netlabs.org/samba</a>

So, just why should this article be headlined: "An anxious wait for EU court ruling on Microsoft" when any cause for "anxiety" should be directed towards those who do not know any better!
Posted by Commander_Spock (3123 comments )
Reply Link Flag
Commander_Spock is a spambot
Commander_Spock is a spambot
Posted by t8 (3716 comments )
Link Flag
 

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