WinInfo Daily UPDATE, March 15, 2004

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In the News

- EU Brands Microsoft an Abusive Monopolist, Sets Stage for Final Ruling

==== In the News ====

by Paul Thurrott, [email protected]

EU Brands Microsoft an Abusive Monopolist, Sets Stage for Final Ruling

Representatives of the 15 nations that make up the European Union (EU) met during a closed-door session this morning and unanimously backed a European Commission draft ruling that brands Microsoft a monopolist that illegally abuses its market power on the continent. "The member states have unanimously backed the Commission's draft decision," a Commission spokesperson said. The ratification of the draft ruling means that the clock is now ticking for Microsoft. Unless the company can negotiate a last-minute settlement of the 5-year-old antitrust case, the Commission will soon fine Microsoft between $100 million and $1 billion; the company could also face a set of procedural and behavioral remedies that could have sweeping ramifications on the way it does business around the world. The Commission could finalize the draft ruling as soon as next week, after a second meeting at which the EU representatives will determine the size of the fine to levy against Microsoft.
Most at risk for Microsoft is its sweeping digital-media strategy, which hinges on the inclusion of Windows Media Player (WMP) and other related technologies in the company's dominant Windows products. The Commission is expected to ask Microsoft to sell a version of Windows that doesn't include WMP or to offer competing products, such as Apple Computer's iTunes and RealNetworks' RealPlayer, on the Windows CD-ROM that ships at retail and with new PCs. Microsoft has strongly fought both strategies and suggested instead that PC makers could ship a "must-carry" CD-ROM with their systems, separate from Windows, that includes competitive products. The Commission rejected that proposal last month.
Microsoft declined to comment about today's decision. But the company has pledged to appeal any verdict that requires it to change the way it develops software, and, if granted, an appeal would last at least 3 years, according to experts in European antitrust law. In the computer industry, 3 years is a long time; the European antitrust case could eventually become as watered down and ineffectual as the US case, which started strong but petered out under the corporation-friendly Bush administration.
Nevertheless, the Commission has a bargaining chip that wasn't available to US courts. Although Microsoft is expected to appeal any negative verdict, the company isn't automatically entitled to an appeal. The European Court of Justice could reject the appeal because a 3-year delay would make the ruling inconsequential, given the rapidly changing business climate. For the court to reject an appeal, however, the Commission's case has to be strongly researched and decisively written. Predictably, European antitrust regulators have been working toward that goal for the past several months.

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