Microsoft Ruling Sparks Debate

Microsoft's rivals applaud the European court's decision, but others worry about business impact.

A European courts ruling against Microsoft not only once again fueled the debate over the software makers business practices but also raised concerns about how U.S. technology companies doing business on the continent will be treated.

The European Court of First Instance Sept. 17 upheld the findings of the European Commission in 2004 that Microsoft 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 court also upheld the $613 million fine imposed on the Redmond, Wash., software maker.

Microsoft officials were reluctant to comment much on the courts decision, instead saying they needed time to go through all 238 pages of the ruling. Still, Brad Smith, the companys general counsel, admitted that the decision raised as many questions as it answered.

"There are a number of things that are not spelled out explicitly in the decision itself," Smith said.

"I am hopeful that we can have the kind of conversation that will enable us to know with confidence what we must do and what we can do in other areas, and I am hopeful that we can do that very quickly," he said.

One of the biggest issues to be resolved is the pricing of Microsofts communication protocols, which the European Commission earlier in 2007 said were too expensive, Smith said.


To read about why the Department of Justice and lawmakers denounced the EUs decision, click here.

In response, Microsoft did drop the price for protocols that are incorporated into products distributed in Europe to 1 percent of the revenue generated from the product, but it remains unclear whether that price is acceptable to the commission, he said.

"If the commission feels that our prices are still too high, we will, of course, want to understand that very quickly so that we can address it," Smith said. "… If the price is still too high, it will be very important for us to understand what price is low enough, so that we can conform to all of our obligations."

However, while Microsoft officials themselves were putting off commenting too much about the ruling, others in the industry—friends and foes alike—were letting their feelings be known.

"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," said Matthew Szulik, CEO of Red Hat, in Raleigh, N.C.

Interoperability information is "critically important and cannot simply be withheld to exclude all competition," Szulik said. One of the rulings in the case was that Microsoft must open its communications protocols.

"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 and look forward to examining the decision in greater detail," Szulik said.

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