EU court: Microsoft guilty of abuse

Microsoft was told three years ago to go away and do its homework after losing a competition ruling, but now the software giant concedes "additional steps" are still needed to comply.



Brad Smith, Redmond's general counsel, made the admission yesterday after the European Court of First Instance rejected Microsoft's appeal against a fine of €497m (£750m).



Handed down by the European Commission in March 2004, the record fine was to punish Microsoft for abusing its dominant 95% market share of (OS) PCs to freeze out its rivals.



The decision was two-fold: Microsoft failed to supply 'interoperability information' to rivals, and bundled MS Media Player with all Windows PCs, muscling out other media player providers.



Yesterday, the Luxembourg Court said withholding interoperability data results in "reinforcing Microsoft's competitive position…and creates a risk that competition will be eliminated."



It also upheld the Commission's finding that Microsoft's refusal to supply the information "limits technical development to the prejudice of consumers."



Its verdict went on to rubbish Microsoft's appeal arguments; among them, that supplying client/server and server/server communication protocols would let rivals clone MS products.



Turning to whether Microsoft's bundling of its Media Player with Windows OS amounts to abuse of its position, the Court ruled the Commission's 'guilty' ruling was "well-founded."



Tying in application software with system software, regardless of not charging consumers, has given MS an "unparalleled advantage" which "would lead to a weakening of competition."



Summing up, and endorsing the record fine, the Court of First Instance said it "essentially upholds the Commission's decision finding that Microsoft abused its dominant market position."



The verdict, which was the first of its kind to be broadcast live on TV, gives Microsoft two months to appeal on matters of law to the European Court of Justice – the EU's highest court.



Reflecting immediately after the verdict was issued, Mr Smith, for Microsoft, said "we all have to acknowledge that there are some issues that do remain open."



Less diplomatic wording from the Redmond camp, obtained by The Guardian, states MS believes the regulator hopes to "reconfigure how the marketplace works by handicapping the leading player."



But publicly responding, Microsoft said: "If we need to take additional steps in order to comply with today's decision, we will do so."



Lawyers say the case, described as a David V Goliath (given Brussels' finite team of legal experts); will now play a part in forming new principles for national courts and competition authorities inside the EU.



Last night, the Open Rights Group, a lobbyist against digital monopolists, said the court's rejection of Microsoft's appeal is "good news for consumers and business alike."




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