Posted on 09/17/2007 6:13:24 AM PDT by webschooner
BRUSSELS/LUXEMBOURG (Reuters) - Microsoft suffered a stunning defeat on Monday when a European Union court backed a European Commission ruling that the U.S. software giant illegally abused its market power to crush competitors.
The European Union's second-highest court dismissed the company's appeal on all substantive points of the 2004 antitrust ruling.
More importantly, it endorsed Commission sanctions against Microsoft's tying together of software and refusal to give rival makers of office servers information to enable their products to work smoothly with Windows, used by 95 percent of computers.
It annulled only the EU regulator's imposition of a Microsoft-funded independent trustee to monitor compliance.
"The Court of First Instance essentially upholds the Commission's decision finding that Microsoft abused its dominant position," a court statement said.
DOWNBEAT
Microsoft General Counsel Brad Smith was downbeat in speaking to reporters at the courtroom, promising the company would obey the ruling in full. He said there was no decision yet on whether to appeal to the European Court of Justice.
"It is clearly very important to us as a company that we comply with our obligations under European law," Smith said. "We will study this decision carefully and if there additional steps we need to take in order to comply with it, we will take them."
Microsoft has used every recourse open to it in every case brought against it by governments and regulators.
The company has weathered a series of defeats in antitrust cases in the last decade and sees legal setbacks as almost part of its business model and a price for its near-monopoly.
Microsoft has already moved to new battlegrounds such as seeking acceptance of its technical standards across the industry, while continuing to bundle new features into its new Vista desktop software.
Rivals welcomed the EU court decision as a signal that authorities do not intend to allow Microsoft to pursue anti-competitive practices with impunity.
The Commission ordered the company to sell a version of Windows without the Windows Media Player application used for video and music, which few have bought, and to share information allowing rivals' office servers to work smoothly with Windows.
Microsoft has not demonstrated the existence of objective justification for the bundling, and ... the remedy imposed by the Commission is proportionate," the court statement said.
A spokesman for Microsoft opponents, the European Committee for Interoperable Systems, said the ruling confirmed Microsoft had abused its near-monopoly in computer operating systems and set ground rules for the company's behaviour.
"This decision establishes principles for the behaviour of this company. Microsoft should now finally comply with the Commission decision on operability," lawyer Thomas Vinje said.
Another winner was the Free Software Foundation, which makes free, open software for work group servers. "Microsoft can consider itself above the law no longer," said Georg Greve, president of the FSF Europe.
The judges ordered Microsoft to pay the costs of FSF and those of the software giant's business rivals, which had supported the Commission's case. By contrast, Microsoft's allies were forced to bear their own costs.
The Commission must pay 20 percent of its own costs and 20 percent of Microsoft's while Microsoft must pay 80 percent of its own costs and 80 percent of the Commission's.
The ruling was made by the 13-judge Grand Chamber of the Court of First Instance in Luxembourg, the first time such a matter has been broadcast on live television.
Since the original decision, the Commission has fined Microsoft a further 280.5 million euros, saying it had failed to comply with the interoperability sanction. The EU regulator is considering a further fine for non-compliance.
(additional reporting by Mark John in Luxembourg, Sabina Zawadzki and William Schomberg in Brussels)
Microsoft shares traded in Frankfurt were down 2 percent at 20.40 euros at 1021 GMT, underperforming the European technology index which was down 0.4 percent. About 15,000 shares had changed hands, roughly the 30-day average daily trading volume.
The court said Microsoft, the world's largest software maker, was unjustified in tying new applications to its Windows operating system in a way that harmed consumer choice.
The verdict, which may be appealed only on points of law and not of fact, could force Microsoft to change its business practices.
It also gives EU Competition Commission Neelie Kroes a green light to pursue other antitrust cases and complaints involving Microsoft, Intel, Qualcomm and Rambus, and to issue draft new antitrust guidelines that were put on ice pending the ruling.
"Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct. The Commission will do its utmost to ensure that Microsoft complies swiftly", Kroes said in a statement.
The court upheld a record 497 million euro ($689.9 million) fine imposed on the company as part of the original decision.
“Microsoft ought to use their EULA to disable all copies of Windows running in Europe. They could also threaten to stop selling in Europe. They are not completely powerless in this. These are just the two most extreme cases.”
Gosh, I sure hope they don’t do that. That would force Europe to accelerate its adoption of Linux. Moving form a toy OS to a real one would certainly give them a significant advantage over us.
Same thing should have happened in the US.
Fortunately, with Linux getting better all the time, MS’s domination is nearing an end. ‘Bout time.
Yeah... maybe we should subsidize them there.
“Don’t worry about the anti-trust ruling, Microsoft, that now falls under the budget for the department of defense. You just keep pushing for Vista adoption in Europe, and, oh yeah, we’ll be using SELinux distros here, so, um, don’t it take it personally.”
I’m shocked, shocked I tell ya ..............
Right now, there is a huge network of compromised Windows machines, called "Storm Bot" that is estimated to be more than 1 million computers in size. Most of the spam and trojans comes from this distributed system, which it is believed is run by the Russian mafia. Only Windows, by nature of its poor design (not because it is ubiquitous) could be compromised on such a wide scale and so easily. And, we are all paying for it in terms of dealing with spam and lost productivity.
Microsoft has shipped in the past and is shipping currently products that in their own way are as defective as toys with lead paint or fertilizer-laced pet food.
LOL
Spam could be blocked in minutes if internet providers blocked ordinary users from acting as mail servers by default. This is not a big technical problem.
I’m actually running vista right now and while I don’t believe micorosft should be sued for its production ... well suffice to say I’m somewhat disapointed in it. When are they going to go back to good old dos. White text on a black screen.
>> Let THEM develop their own software and operating systems.
Ever hear of Linux? and open source applications?
I’m not a Microsoft basher by any means — nor am I a Microsoft cheerleader. I use both Windows XP and Linux every day; each has its strengths, weaknesses, and purpose. I have engineering software that only runs on Windows; ditto for Linux.
But all this talk of MS withdrawing from Europe is silly. They can and will have a replacement — Linux — available to them immediately. MS won’t let that happen by withdrawing from any world market.
Microsoft’s current (low-profile) fight, in case you haven’t heard, is to attempt to use their IP portfolio to intimidate Linux users, kind of like SCO attempted. That’s just as wrong IMO as what the EU is doing to MS.
My conclusion: MS is a big boy. None of this is a surprise to them. They didn’t get where they are by giving up when it gets rough. They already have new directions they havent’s even made public.
my 2c
I don't mind governments going after MS for their scams, I just wish they'd go after MS for the actual scam and not make up some BS about media players and web browsers.
Most of the crap MS pulls to pad their bottom line is esoteric and aimed at businesses - who can afford to pay. Usually, it's only seen by programmers and IT professionals....but it's there and MS deserves to get hammered for it.
That being said, I'm still a big fan of XP and Office 2000. SQL 2000 Server and 2003 Server are nice too.
Hardly...
MS just got busted for the same crap they’ve been busted for in the past in the US.
Nothing Kangaroo about it.. MS engages in illegal practices, and has been found guilty of it in courts all over the world at various times.
Hogwash. This was about the money.
Hahaha.. of course it is... all ANTITRUST is about money... its about monopolies using their money to ensure that they never have to face competition.
This is about Microsoft once again being caught engaging in illegal business practices... as they have been caught by many courts around the world doing many times.
I’m no fan of the EU and their courts, but this might be a legitimate ruling. I absolutely detest Bill Gates; he’s a ruthless, pimple-assed prick.
The regulators quoted in the article crowed about their regulatory powers to reduce their markethshare.
If you don’t like Microsoft, don’t use their products.
What? Your favorite apps don’t run under Linux? As a developer, I can tell you that I see no money in the Stallman world. He said so himself.
You can joyfully celebrate the actions of those who seek to prevent someone from offering their property. But here’s the fun part. Try forcing me to develop software for you.
Good luck with that.
I have a bone to pick with the honchos at Microsoft.
another unhappy customer.
I’ve been in the software world since 1983, and yes, Microsoft has been found guilty of anti-trust violations across the globe for decades... and rightly so.
People who think Microsoft is beyond reproach are either incredibly naive, or ignorant.
This is one of the key weaknesses of the “Market As God” world view. Anti-trust laws exist for a reason, if you cared to do a little investigation into history you would see that.
Now, you can not like the laws all you want, but they are part of the world we live in, and companies are required to abide by them. Monopolies often don’t, and get busted for it. Don’t blame the courts for finding a company guilty of doing something against the law that they did.
MS has been found guilty of illegal business practices by courts all over the globe... they are not some beyond reproach organization. Gates ET Al are free to make as much money as they can within the law.. then they go outside the law, they can and should be smacked down for it.
You don’t like the EU’s laws... move there if you don’t live there already, and get into government and change them.
I’m sure there will be a lot people here on FR who will be fans of the EU looting an American company for billions to fund their socialism.
While MS should be able to bundle anything they please this part “More importantly, it endorsed Commission sanctions against Microsoft’s tying together of software and refusal to give rival makers of office servers information to enable their products to work smoothly with Windows, used by 95 percent of computers.” Is a necessary correction.
If your a monopoly on the desktop *and* you bundle other software you should have to publish a robust API!
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