Microsoft must share code, pay EU fine

Microsoft lost its appeal of a European antitrust order Monday that obliges the technology giant to share communications code with rivals, sell a copy of Windows without Media Player and pay a $711 million fine (497 million euros) the largest ever by EU regulators.

The EU Court of First Instance ruled against Microsoft on both parts of the case, saying the European Commission was correct in concluding that Microsoft was guilty of monopoly abuse in trying to use its power over desktop computers to muscle into server software.

It also said regulators had clearly demonstrated that selling media software with Windows had damaged rivals.

"The court observes that it is beyond dispute that in consequence of the tying consumers are unable to acquire the Windows operating system without simultaneously acquiring Windows Media Player," it said.

"In that regard, the court considers that neither the fact that Microsoft does not charge a separate price for Windows Media Player nor the fact that consumers are not obliged to use that Media Player is irrelevant."

But it did overturn regulators' decision to appoint a monitoring trustee to watch how Microsoft had complied with the ruling, saying the commission had exceeded its powers by ordering Microsoft to pay for all the costs of the trustee.

Microsoft, which made $14.07 billion US in profits during the past fiscal year, can appeal the decision to the EU's highest court, the European Court of Justice, within two months.

"I don't want to talk about what will come next," said Microsoft lawyer Brad Smith in answer to questions about the possibility of an appeal. "We need to read the ruling before we make any decision."

European Union competition commissioner Neelie Kroes urged Microsoft to act on the 2004 antitrust ruling.

"The court has upheld a landmark commission decision to give consumers more choice in software markets," Kroes said in a statement. "Microsoft must now comply fully with its legal obligations to desist from engaging in anticompetitive conduct. The commission will do its utmost to ensure that Microsoft complies swiftly."

Kroes called the decision "bittersweet," saying software customers still have no more choice than they did three years ago.

"The court has confirmed the commission's view that consumers are suffering at the hands of Microsoft," she said.

She refused to say if EU regulators would follow up antitrust worries they flagged last year with Microsoft's new Vista operating system, saying only that "if it is not in line with our policy, then we will act."

The ruling showed that handing over key interoperability code that helped rivals make compatible products was required in the software market, she said.

The European Committee for Interoperable Systems called the ruling a good result. "It's a very good day, for it signals that there will be fair competition for the sector," said Maurits Dolmans, a lawyer for the group.

In its 248-page ruling, the court upheld both the commission's argument and its order for Microsoft to hand over information on server protocols to rivals. Microsoft had claimed these were protected by patents and the commission was forcing it to give away valuable intellectual property at little or no cost.