Microsoft, EU Face Off over Antitrust Issues
Redmond giant's latest antitrust court drama begins Monday.
-- Microsoft Corp. began a challenge Monday before the EU's
second highest court of the European Commission's landmark antitrust
ruling against it, arguing that the future of innovation in the
technology industry was at stake.
In its opening
statement, Microsoft said the Commission made "serious errors" in its
decision two years ago that the company abused its dominant market
The hearing, expected to take five days,
will focus on Microsoft's behavior in the late 1990s, with EU
regulators using evidence from the company's rivals.
its core, the hearing is focusing on two issues. The first is
Microsoft's bundling of Media Player as a core part of its operating
system, the second is on the Commission's order that Microsoft share
information and code with competitors to help them make software that
worked smoothly with Windows.
2004, Microsoft was fined a record 497 million euros ($613
million) after the European Commission found that the
taken advantage of its position as the leading supplier of software for
PC operating systems to elbow in on rivals for work group server
operating systems and for media players.
commission ordered Microsoft to share information and communications
code with rivals and to market a version of Windows without the media
player to give consumers a free choice of media software.
opening arguments, Microsoft's lawyers claimed that stripping out Media
Player from Windows XP left consumers without the ability to listen to
more music or watch more video.
On the Commission's
order, Microsoft made available for purchase Windows XPN, which did not
include the ubiquitous player. That, lawyers said, meant consumers
could not listen to CDs or play music from providers like Yahoo or
"Many functions ... were lost in creating
Windows XPN," Microsoft said, adding that all media functionality in
Windows is part of the platform.
Both the world's
largest software company and its rivals argue that the right to
innovate lies at the heart of the case. Microsoft says it must be
allowed to enhance its programs and guard its intellectual property.
Critics argue the giant cannot be allowed to use its dominant market
position to strangle competitors.
"The ability to
innovate is important for the success of any company and for the
economic success of any country," said Microsoft lawyer Brad Smith
before the hearing. "We think that the facts will show that there is
strong competition and consumer choice."
the EU court's decision, which isn't expected for a year to 18 months,
would reverberate across the industry, regardless of the outcome.
impact of this case goes far beyond Microsoft," he said.
EU said in December that Microsoft has not done enough to help its
rivals develop compatible software and threatened Microsoft with daily
fines of up to 2 million euros ($2.4 million), backdated to Dec. 15,
unless it complied. It has not yet decided whether it will levy these
In the hearing, EU regulators will use
evidence from RealNetworks on the media player case and IBM, Novell,
Oracle and Sun Microsystems on systems compatibility
of those companies are currently involved in the legal battle, although
they are members of two broad industry coalitions -- the European
Committee for Interoperable Systems and the Software &
Information Industry Association -- that will back the Commission.
the aftermath of the EU's ruling, companies have moved into offering
their own work server options, such as the popular Linux software that
shares its code openly.
Times may have changed, but
Microsoft's behavior has not, ECIS asserted as it filed a new complaint
with regulators in February, claiming that Microsoft was up to its old
behavior on a wider scale.
ECIS lawyer Thomas Vinje
says the latest version of Microsoft's desktop software, Vista -- due in
stores early next year -- will try to squeeze out rivals by bundling
security, search engine and office functions.
says Microsoft vs. the European Commission has the potential to set the
"rules of the road" for the software giant before it launches Vista.
bottom line in this case is about the future, whether consumers will
have the choice of that innovation in future or whether Microsoft will
be allowed to contain competition and innovation," he said.