EU sees end of Microsoft monopoly after court victory

Sep 17, 2007, 16:05 GMT

Luxembourg/Brussels - The European Union (EU) said it expected to see an end to Microsoft's 'super-dominance' of the global software market Monday after winning a key legal victory against the US multinational.

'The (software) market is being broken open and no one can abuse its dominant position any longer,' said EU Competition Commissioner Neelie Kroes.

Her comments followed a landmark ruling in Luxembourg by the EU's second-highest court, the Court of First Instance, which earlier in the day had rejected a Microsoft appeal against a 2004 decision by the bloc's executive, the European Commission (EC).

The court judged that the EC was right to impose a record 497-million-euro (689 million dollars) fine on Microsoft for abusing its dominant position.

Microsoft was forced to pay an additional 280.5-million-euro fine two years later after the EC found it guilty of not complying with its March 23, 2004 decision.

In that decision, the EC ruled that the company had carried out anti-competitive practices by refusing to allow its trade rivals access to so-called 'interoperability' protocols - instructions needed by servers and other software operators to work effectively with Windows.

The EC also objected to Microsoft's decision to bundle its own media player with the operating system, arguing that this would drive other producers like Real Networks' Real Player out of the market.

On Monday, presiding judge Bo Vesterdorf of Denmark also backed the EC's demand that Microsoft should give rivals access to some of its codes and sell a 'light' version of its Windows operating system, stripped of its media player.

'The court has confirmed that Microsoft can no longer prevent the market from functioning properly and that computer users are therefore entitled to benefit from choice, more innovative products and more competitive prices,' Kroes told a press conference in Brussels.

EU officials said they expected the court's ruling to result in a 'substantial' drop in Microsoft's global market share of 95 per cent.

'First, and most importantly, it sends a clear signal that super- dominant companies cannot abuse their position to hurt consumers and dampen innovation by excluding competitors in related markets,' Kroes said.

In a statement, Commission President Jose Manuel Barroso said the verdict confirmed 'the objectivity and credibility of the Commission's competition policy'.

Experts said the court's ruling was expected to embolden the EU's competition policy and other anti-trust bodies around the world.

The software giant said it would do everything in its power to comply with the EU's demands.

'We are 100 per cent committed to complying with every aspect of the decision,' said Brad Smith, Microsoft's top legal expert. Smith also said he would need time to read the 1373-paragraph-long judgement in full before deciding on whether to file an appeal.

Microsoft's rivals called it 'a screaming victory for Europe' and said the EC should now set its sights on other Microsoft products that enjoy a near-monopoly, such as its Office spreadsheet and word processing software.

Thomas Vinje of the European Committee for Interoperable Systems (ECIS) also dismissed claims by Microsoft lawyers that Monday's ruling would affect other big players in the information technology industry, such as Apple, Google or IBM.

'Today's ruling applies to Microsoft, and Microsoft only. Other companies have nothing to fear from this decision,' Vinje said.

Microsoft's allies were taking the opposite view.

'This is a completely haphazard treatment of intellectual property owned by Microsoft. This is a very bad precedent for all European industry and possible investment by small and medium sized companies in Europe,' said Jonathan Zuck, whose Association for Competitive Technology (ACT) had been supporting Microsoft in Luxembourg.

However, the court did annul one minor EC decision establishing an independent trustee charged with overseeing the company's cooperation with the order to make its protocols available.

Microsoft is the world's largest software company and its Windows operating system is used by about 95 per cent of the world's computers.