On Mon, Mar 15, 2004 at 08:25:48AM -0600, Hugo Vanwoerkom wrote:March 15, 2004
http://www.nytimes.com/2004/03/15/business/16CND-TECH.html?hp
Arrgh. www.nytimes.com is one of those FOUL sites which requires you to enter full details of any motoring convictions you have, your family tree back to great-great-great-grandparents and how many times a week you masturbate before it lets you read anything. Any chance of posting a [link to a] summary?
Europe Supports Antitrust Ruling Against Microsoft
*By PAUL MELLER*
RUSSELS, March 15 ? Top antitrust regulators from the 15 nations in the European Union gave unanimous backing today to a draft ruling by the European Commission that officials say finds that Microsoft abused its dominance in operating software.
A European Commission spokeswoman, Amelia Torres, said after a closed-door session:
"The member states have unanimously backed the commission's draft decision." She did not elaborate.
With today's backing, the clock on the five-year-old antitrust case against Microsoft begins to run down. In less than two weeks, barring a last-minute settlement, the European Commission is expected to declare Microsoft an abusive monopolist, impose a fine of $100 million to $1 billion and order the company to make fundamental changes to the way it sells software in Europe.
Such a ruling would be a significant setback for Microsoft after it overcame its most serious legal challenge by settling a sweeping antitrust case in the United States in 2001. And it would be the defining moment in the five-year tenure of Mario Monti, Europe's top antitrust regulator, whose term ends in the fall.
Microsoft has lobbied national governments in an effort to persuade regulators to tone down the ruling of the European Commission, the year-round administrative arm of the European Union.
But Microsoft's political influence is limited in Europe. The company employs 12,000 people in Europe, the Middle East and Africa ? less than a quarter of the 55,000 that General Electric employed in the European Union when it was trying to win regulatory approval of its planned acquisition of Honeywell International for $45 billion. That deal was blocked by the commission in July 2001.
"G.E. didn't manage to win over the national regulators, so I doubt Microsoft can," said Thomas Vinje, a competition and intellectual property lawyer in Brussels and a vocal critic of Microsoft. His clients include the Computer and Communications Industry Association, which has played a prominent role in antitrust cases against Microsoft on both sides of the Atlantic.
Even if Microsoft does find a sympathetic audience among the national regulators, they are highly unlikely to demand changes to the commission's proposed ruling, said Jacques Bourgeois, a longtime competition lawyer in Brussels. "In my experience, I have never seen a fundamental change to a draft ruling after one of these meetings," he said. Mr. Bourgeois has no direct involvement in the Microsoft case.
Microsoft officials declined to comment on Monday's meeting. The company has repeatedly said that it wants to reach an amicable solution with European regulators. A settlement is possible any time before the commission issues its final ruling, which could come as soon as March 24.
The greatest effect of a ruling against Microsoft would be evident in the way the company sells its music and video-playing software program Media Player. Instead of bundling the program into its Windows operating system as Microsoft does now, the European Commission is expected to demand that Microsoft sell two versions of Windows to manufacturers of personal computers ? one of them with Media Player stripped out.
The commission has contended that by bundling Media Player into Windows, Microsoft is abusing the dominance of the operating system to the detriment of competitors like RealNetworks and QuickTime.
"Media Player is an integral part in Microsoft's longer-term strategy for Windows," a recent Goldman, Sachs research note said. Microsoft, it said, "may refuse to settle, electing to challenge this in court."
But a legal challenge, an appeal at the European Court of First Instance in Luxembourg, would take at least three years to conclude. In the meantime, the court may turn down a request to suspend the changes ordered by the commission until after the appeal, forcing the company to alter the way it does business in Europe.
Windows software generated sales of $3.4 billion in Western Europe in 2002, nearly 30 percent of worldwide sales, according to an estimate by a research company, the International Data Corporation. (Microsoft does not break out sales figures by region.)
Microsoft lawyers have said that any legal remedy imposed on its operations in Europe might be extended to all Windows programs in all regions, including the United States. Yet some analysts point to recent indications that Microsoft could tailor a version of its software for Europe.
Dan Kusnetzky of International Data said Microsoft recently introduced a version of Windows specifically for the Thai market.
"Microsoft may be trying to gain expertise in building a granular version of Windows ahead of the European ruling," he said. "The impact of the European ruling could be limited to Europe until the rest of the world demands something similar."
Ordering Microsoft to sell two separate versions of Windows to PC manufacturers would restore competition to the audio and video software market only if the version without Media Player were sold at a discount, analysts and lawyers said. "Pricing is one of the components that must be considered if the ruling is to have any effect," Mr. Kusnetzky said.
A person close to the case said that the commission could not dictate the prices of the different versions.
But the draft ruling orders that Microsoft "must not do anything which would make a bundled version of Windows more attractive to PC makers than an unbundled one," this person said.
In addition to the bundling question, the commission also wants to force Microsoft to share enough Windows secret code to allow rivals to design server software that works as smoothly with Windows as Microsoft's own server software. Servers connect networks of personal computers. A Microsoft competitor in this market, Sun Microsystems complained to the European Commission in 1998 that it was unable to compete fairly with Microsoft because it did not have the necessary information about Windows to make its products work properly with Windows on individual computers.
"We spend millions of dollars trying to reverse-engineer Windows so as to allow our server software to work with it," said Lee Patch, Sun's vice president for legal affairs.
The commission is expected to order Microsoft to propose what computer code information should be disclosed to allow rivals' software to work with Windows. The settlement with the Justice Department also has a software licensing provision, although some competitors have complained that Microsoft's conditions are prohibitive.
According to a person who has seen the draft ruling, Microsoft would have to report back to the commission with concrete proposals within two or three months. The regulator would then consult competitors including Sun to see if the information Microsoft offered was enough to make rival server software interoperable with Windows.
Microsoft is more likely to agree to the commission's demands concerning this second matter, and there is already a precedent.
In 1984, I.B.M. ended a four-year investigation by the European Commission by agreeing to license certain interface information to competitors in Europe. "The I.B.M. solution was a good solution for its time," Mr. Patch of Sun Microsystems said. "It's not far removed from what we're after, but time is running out for Microsoft to reach a similar settlement now."
Copyright 2004 York Times Company <http://www.nytco.com/> | Home
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