Microsoft Loses EC Case

A European court rejected Microsoft's appeal to overturn the European Commission's 2004 ruling that the company had abused its dominant position in operating systems, reports the NY Times.The European Court of First Instance ordered Microsoft to pay the €497.

A European court rejected Microsoft's appeal to overturn the European Commission's 2004 ruling that the company had abused its dominant position in operating systems, reports the NY Times.The European Court of First Instance ordered Microsoft to pay the €497.2 million, or $689.4 million fine

"Its clearly a major defeat for Microsoft. There is no doubt it will spur the Commission to regulate Microsoft much more significantly," Reuters quotes Chris Bright, a British competition lawyer. They will find that future innovation by Microsoft will be hampered quite significantly."

You can read Microsoft's official reaction to the decision here. The official court decision is here and you can listen to the reactions of Microsoft General Counsel Brad Smith just after the decision and at the press conference.

Basically his comments boil down to this:

- Yup, we lost, but it's not as bad as it looks. At least we have a professional relationship with EC now and can work together more effectively going forward. (i.e. They know my home number and I know all of theirs).

- We'll do our best to listen and comply to the commission's ruling (i.e we'll use those ivy heads of ours to figure out how to weasel out as many of the clauses as possible).

- Things have changed since the case was originally filed. We're a more open company now than we were nine years ago (i.e. don't hate us too much. We're a bigger, friendlier, Microsoft now).

- "IT tends to be an industry that’s characterized by companies with large market shares (i.e. Hey, why are you guy's picking on us? We're no worse than Apple in digital music or Adobe in streaming media).

Bottom line? Microsoft doesn't get it. The commission wasn't picking on Redmond because it had 95% marketshare in a given area. It was going after Microsoft because it used that market position to dominate in another technology area. Neither Apple nor Adobe have been successful in doing that just yet.

At the same time, Microsoft is no fool. Just about every communications revolution has been characterized by three waves: proprietary technology introduction, market jockeying and competition, and then semi-reconciliation as vendors understand that no one solution will win in a given market. The company has been able to drag out this decision long enough that after nine years the time for opening up core communication technologies is almost here anyway.

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