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Microsoft loses European Union appeal
22 December, 2004
by Mark Cox
The Court of First Instance of the European Communities has
dismissed an appeal by Microsoft for interim measures that
would have allowed it to delay offering a stripped-down version
of Windows in the European market, and share its protocols
with rivals. The Court found that Microsoft would suffer no
irreparable harm from these remedies, imposed by the executive
European Commission in March of this year, when it also fined
Microsoft $665 million fine for monopoly abuse of its Windows
operating system in bundling Windows Media Player with Windows
to damage competitors.
In Europe, this means that Microsoft must make available a
stripped-down version of Windows which does not include Windows
Media Player. Brad Smith, Microsoft's general counsel and
senior vice president, said at noon Wednesday that Microsoft
would activate a web page later in the day with information
how companies, including their competitors, can license the
communication protocols from them. Smith also said that Microsoft
would now move forward with the remaining work to having a
version of Windows with Windows Media Player removed from
it. He said it will be made available to European PC makers
in January and to the channel, including software resellers,
by February.
Smith also said that even though Microsoft lost its appeal
for interim measures, the Court also recognized that some
of our arguments on the merits of the case were well-founded,
and may ultimately carry the day when the substantive issues
are resolved in the full appeal.
So what is all this likely to mean?
Industry groups have very different views of what this decision
means for the market, which, not surprisingly, correspond
with the positions of the respective parties in the case that
they have supported during the trial. Ken Wasch, President
of the Software & Information Industry Association (SIIA),
which has opposed Microsoft's position here, called the decision
"an historic step that benefits consumers and ensures
that developers of innovative applications and services can
compete globally."
"The decision on workgroup servers is vital to creating
real and meaningful choices for business and consumer users,"
Wasch said. "The decision on Windows Media Player is
critical to promoting a variety of platforms on which digital
content can be delivered."
On the other hand, the Computing Technology Industry Association
(CompTIA, which has supported Microsoft in this case, expressed
disappointment in the decision, calling it discouraging news
for the IT industry in Europe and for consumers around the
world. CompTIA believes that consumers will suffer as a direct
result of the ruling, because IT companies will be less willing
to innovate, fearing that their intellectual property will
be appropriated by government intrusion into the marketplace.
Lars Liebeler, counsel for CompTIA, also said that consumers
lose because the product simply won't work as well.
"It's quite clear that the stripped down version of
Windows without Media Player is not a full featured version
and some applications are not going to work. Some features
will work, some don't, and the end result is a profoundly
negative effect on consumers.
Liebeler suggested that suggestions made on behalf of the
European Commission that most users wont notice any difference
in functionality, and that Microsoft should handle problems
by coming up with more kindly error messages were somewhat
surreal.
"I just can't imagine you would say something like that,
when you know you're injecting confusion into the marketplace,"
he said. "Regulators think they are doing consumers a
favor by trying to impose such a remedy. In the US, the courts
got it right. Product integration has vast benefits to consumers."
And on the front lines of any dissatisfaction will be the
people who sell the products, who will have to deal with the
complaints.
But that won't be in the United States or in Canada. It's
clear that Microsoft will not be extending the same right
to buy the stripped-down version to consumers outside Europe.
Smith said that the licensing program is available to countries
of all nationalities -- any company anywhere can obtain a
license. But there is a catch, and a big one. In order to
use the license under the terms of the order, the software
has to be developed and distributed in Europe
"We have no plans to offer this version of Windows outside
the European economic area at this time, and I don't expect
we will have any such plans in the future," Smith said.
"This is a version of Windows that offers consumers less
value than the version of Windows they get today.
"It makes no sense to offer a version of Windows that
we don't believe people want," Smith added.
So in the end, will this simply have little impact on users
and sellers in North America who don't own Microsoft stock?
Not, CompTIA's Liebeler said, in a world of global commerce.
"There is an interrelationship between the two largest
economies in the world," he said. "For instance,
you may not fully know if all parts of your website are visible
for consumers in Europe." And of course, some companies
will be affected more directly, such as independent software
vendors (ISVs) who make games for all over the world.
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