WinInfo Daily UPDATE, April 27, 2004

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In the News

- Microsoft Denounces EU Decision

==== In the News ====

by Paul Thurrott, [email protected]

Microsoft Denounces EU Decision

After the European Union (EU) released its 300-page decision last week, Microsoft's defense team launched a campaign designed to find holes in what will likely be one of the most comprehensive antitrust documents ever created. Microsoft quickly cast the stunning EU decision--which cites internal Microsoft email, public company policy, and opinions from Microsoft competitors--as "overreaching" and "unprecedented." I haven't heard those two terms used since the company's original epic US antitrust battle.
"The novel legal standards announced in the decision will affect all industries, altering market dynamics and reducing incentives for research and development that are essential to global economic growth," a Microsoft memo said, suggesting that the EU decision exceeds its mandate and will affect other companies besides Microsoft. The company also got specific about the EU's various punishments, which include a $600 million fine and the requirement that Microsoft release a new Windows version in Europe that doesn't include Windows Media Player (WMP). The latter requirement, Microsoft said, means that "even a single complaining component supplier \[can thwart\] innovation ... if its market position may be harmed." The company also argued that it would have to sell a product no one wants.
Regarding the requirement that Microsoft share more internal technical information with competitors, Microsoft noted that "the decision goes well beyond established legal precedents by asserting a broad and ill-defined duty on dominant firms to share the fruits of their research and development with other companies in the same product market." Predictably, Microsoft would like the decision to include specifics about the documentation the company is required to provide. Microsoft probably would use this specificity to find loopholes, as it has with past legal cases in the United States.
Finally, Microsoft noted that the EU decision represents a "troubling departure" from World Trade Organization (WTO) treaty obligations, noting that WTO rules allow compulsory licensing only under special conditions. However, companies with Microsoft's unprecedented market power also often find themselves facing "unprecedented" legal requirements--a description that doesn't read as well as "troubling departure" but is certainly accurate.
During the next few days, I hope to complete my analysis of the EU's massive Microsoft decision and present it in WinInfo Daily UPDATE. I hope the exercise isn't academic: Given Microsoft's successful history of settling legal cases and its potential ability to tie up this case in court for years, whether any of the EU's remedies will ever directly affect the company or its behavior is unclear. Stay tuned.

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