Microsofts Friends, Foes Weigh in on EU Court Ruling

By Peter Galli  |  Posted 2007-09-17

Microsofts Friends, Foes Weigh in on EU Court Ruling

Microsofts friends and foes weighed in on the Sep. 17 landmark appeals ruling by the European Court of First Instance that the software maker had abused its dominant position by refusing to make its products interoperable with those of its rivals and by tying Windows Media Player to the Windows operating system.

The full ruling can be found here, in PDF form.

The decision was welcomed by Linux vendor and Microsoft competitor Red Hat as positive for innovation and consumer choice, both in Europe and around the world.

"The Court has confirmed that competition law prevents a monopolist from simply using its control of the market to lock in customers and stifle new competitors," CEO and president Matt Szulik said.

"In our business, interoperability information is critically important and cannot simply be withheld to exclude all competition. Given Red Hats firm belief that competition, not questionable patent and trade secret claims, drives innovation and creates greater consumer value, we were pleased with the overall decision," he said.

Click here to read more about why the EU court struck down Microsofts appeal.

The Linux Foundation also weighed in, saying that it hoped the ruling would result in a more transparent Microsoft that would work with developers on true open interoperability.

"Customers are too smart to believe watered down claims of interoperability and open standards, especially from a vendor with the legal legacy of Microsoft," Amanda McPherson, the foundations director of marketing, told eWeek.

"Unfortunately, in this case, and others, Microsoft has seen open standards and open source as a threat to their monopoly position and have responded with tactical campaigns to neutralize those threats. You saw it in the OOXML strategy, you see it in the scare tactics levied at Linux over patents," she said.

Ken Wasch, the president of the Software & Information Industry Association, also welcomed the decision as a victory for innovators and consumers everywhere, saying Microsoft now had no option but to immediately cooperate and fulfill the requirements of the March 2004 decision.

"After one of the most thorough investigations in the history of competition law, spanning over 7 years, the Commission has taken a steady and decisive course … From the beginning, the requirements facing Microsoft were clear, and implementing the decision is important to the software industry. We hope that, with this essential step, that this will be forthcoming promptly and effectively," he said in a statement.

But Lars Liebeler, the antitrust counsel for industry body CompTIA (Computing Technology Industry Association), in Oakbrook Terrace, Ill., criticized the decision, saying the Courts finding that Microsoft engaged in anti-competitive conduct by including Windows Media Player in its operating system ignored the realities of the software innovation process and laid the groundwork for further regulatory involvement in product design in the sector.

Click here to read more about how he EU hit Microsoft with a record fine.

"This trend interferes with the workings of the free market and reduces consumer choice in the marketplace. The decision ignores the development of the media player market in the years since the Commissions decision, wherein a rich stream of new non-Microsoft products, such as Flash and i-Pod [and] i-Tunes, have been developed and effectively marketed in conjunction with the continued widespread use of the Windows operating system," he said.

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Microsofts Friends, Foes Weigh

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Members of Microsofts staff have also weighed in on the ruling. Read what they had to say here.

With regard to the ruling that Microsoft must share its server communications protocols with competitors, Liebeler said this "continues the unfortunate trend within the EU to undermine intellectual property rights. Despite evidence offered in Court that Microsofts server communications protocols are innovative and resulted in substantially improved performance of Microsofts server software, the Commission required Microsoft to share these inventions with its competitors," he said.

This would stifle investment in innovations in Europe, and the burden would largely fall on consumers and small and midsize businesses trying to fund their inventions and new products, he said.

For his part, Microsofts general counsel Brad Smith said that the version of Windows offered in Europe today was in compliance with the Commissions 2004 decision, and pointed to the "constructive discussions with the European Commission last year that enabled us to bring to market Windows Vista in conformity with the Commissions 2004 decision."

With respect to its communications protocols and the companys duty to license them, Smith said Microsoft had made a lot of progress in that regard, but acknowledged that "there are some issues that do remain open. "If we need to take additional steps in order to comply with todays decision, we will do so."

Six states want Microsofts U.S. antitrust consent decree extended by five years. Click here to read more.

He also noted that a lot had changed since this case started in 1998. "The world has changed, the industry has changed, and our company has changed. We sought to underscore that over a year ago when we published what we described as our Windows Principles, principles intended to ensure that future versions of Windows, starting with Windows Vista, would comport not only with the principles of U.S. law but with the principles that are applicable here in Europe as well," Smith said.

What had also changed was Microsofts move towards greater transparency and cooperation with others in the industry, he said, citing Sun Microsystems and Novell as examples of this and pointing to the fact that they both had "started out on the other side of this case almost nine years ago."

Smith also affirmed Microsofts commitment to Europe, noting that Windows was now published in 41 European languages versus the 24 European languages published when the case started, at which time the company had 3,900 employees in Europe compared to the 13,000 today.

"When this case started, we were spending $3 million a year on research and development in Europe; today we are spending almost half a billion, and that number will continue to grow. Today we work with over 200,000 business partners, who employ almost 3 million people on the European continent, and that number too will continue to grow," he said.

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