NEWSFLASH: Europe Charges Microsoft with Antitrust Violations

After years of silence, European antitrust regulators have finally issued a ruling in their ongoing investigation of Microsoft's abuses, and the charges aren't pretty. Today, the European Union (EU) announced that Microsoft uses Windows to unfairly leverage its "overly dominant position." By tying Windows Media Player (WMP) to its dominant Windows OS, the EU says, Microsoft is unfairly harming competitors' products such as Apple Computer's QuickTime and RealNetworks' RealOne. The EU is giving Microsoft a last opportunity to reply to the charges before it inflicts punishment on the company. Experts expect the EU to fine Microsoft extensively; the European Commission, the EU's executive arm, has the power to fine the company as much as 10 percent of its worldwide annual revenue.
   "Evidence confirms and in many respects bolsters the Commission's earlier finding that Microsoft is leveraging its dominant position from the PC into low-end servers and that Microsoft's tying of Windows Media Player to the Windows PC operating system weakens competition on the merits, stifles product innovation, and ultimately reduces consumer choice," the Commission wrote in a release.
   "The case as it stands now is too strong to ignore," a Commission spokesperson said. EU Competition Commissioner Mario Monti said that Microsoft's abuses are "ongoing," according to information collected from companies in Europe and the United States. To prevent Microsoft from continuing its abuse, he pledged to seek the strongest measures ever sought in an antitrust case. Monti wants Microsoft to reveal the APIs that bind WMP to Windows so that competitors can tie their applications to the OS in the same fashion. In addition, he wants Microsoft to offer a stripped-down Windows version that doesn't include WMP and a version of Windows that includes WMP and competing media-player software. The EU wants Microsoft to disclose APIs that will help competitors in the server space create applications and services that run as well on Microsoft's server products as Microsoft's applications and services do.
   Monti's strong words mirror those of Judge Thomas Penfield Jackson, who oversaw the original Microsoft antitrust case in the United States. However, an appellate court eventually dropped Jackson's remedy--to break up Microsoft--and the company was able to craft a favorable settlement with the Bush administration's corporation-friendly US Department of Justice (DOJ). Microsoft won't have the same bargaining advantage in Europe, however, in which antitrust laws are more clear-cut. Furthermore, EU antitrust officials are sensitive about their 2001 decision to veto the merger of General Electric (GE) and Honeywell, two American companies. Furor over that decision was a Commission embarrassment, and Monti and his lieutenants are conscious of the fact that the Microsoft case could be another politically important case for the Commission. For this reason, they've taken the time to build a strong, defensible case.

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