NEW YORK—The European Union's second-highest court upheld a key antitrust decision against Microsoft, holding that the world's largest software vendor had used its dominant market presence to immobilize competitors.
The European Court of First Instance in Luxembourg dismissed the company's appeal against an earlier 2004 European Commission ruling on all key points except for one, and upheld the 497 million euro (US$690 million) fine.
The court upheld a decision in 2004 that ordered Microsoft to disclose proprietary data regarding its server operating system and remove its Windows Media Player music and video software from Windows. Since Windows runs on a majority of computers sold, the courts argued that Microsoft's dominance in the PC market was detrimental to software companies developing third-party applications for Windows.
EU's Competition Commissioner Nellie Kroes said at a press conference in Brussels that the 2004 EU commission decision "set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries. The Decision upheld by the Court is particularly important because so many people use computers, be they individual consumers, schools, businesses or governments, and because 95 percent of the world's personal computers run Microsoft's Windows PC operating system."
"Microsoft must now comply fully with its legal obligations, and desist from engaging in anti-competitive conduct. The Commission will do its utmost to ensure that Microsoft complies swiftly," she said.
According to Bloomberg, when asked about Microsoft's compliance, Kroes added, "A market level of much less than 95 percent would be a way of measuring success ... You can't draw a line and say exactly 50 (percent) is correct, but a significant drop in market share is what we would like to see."
Microsoft reached a settlement with U.S. authorities in 2002 over similar claims. It argued that the court's decision would allow the disclosure of trade secrets of Microsoft software to third-parties.
While the upholding of the anti-trust ruling is the biggest setback for Microsoft in years, share prices for Microsoft's stock dropped around 1 percent in early New York trade, suggesting that investors were not too worried about the EU ruling.
Reaction From Microsoft
Brad Smith, Microsoft Corp. Senior Vice President and General Counsel, said shortly after the ruling that while they needed more time to understand the ruling thoroughly, "We appreciate the court's judgment on the trustee issue and the monitoring mechanism, an issue where the court agreed with us, and yet I would be the first to acknowledge that I don't think anyone would say that is the most important part of this case or this decision."
He further said "A lot has changed, but I will say that one thing has remained constant, and will continue to do so, and that is Microsoft's commitment to Europe." He gave examples of how Microsoft's investment in Europe had increased over the last few years.
Regarding the inter-operability of Microsoft and third-party products in the server market, Smith said, "It has not always been an easy process in terms of developing, creating, and publishing the technical documentation that is required by the decision, and to some degree, it reflects the unprecedented nature of the decision."
Microsoft has already accrued the money for the fine and currently sells a version of Windows without Windows Media Player for the European market.
Microsoft can still appeal the decision with EU's highest court, the European Court of Justice.
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