Microsoft weighs options after EU defeat

Microsoft weighs options after EU defeat

Summary: Updated: Microsoft said Monday it will take the necessary steps to comply with a European Union ruling after an appeal court gave the software giant a stinging defeat. Now Microsoft will have to share code with rivals to ensure interoperability.

TOPICS: Microsoft

Updated: Microsoft said Monday it will take the necessary steps to comply with a European Union ruling after an appeal court gave the software giant a stinging defeat. Now Microsoft will have to share code with rivals to ensure interoperability.

Specifically, The EU's second highest court backed a European Commission ruling that Microsoft abused its power to thwart rivals. The biggest issue: Whether Microsoft has to share code to make software interoperable (see Techmeme).

European regulators issued an antitrust ruling in 2004 that Microsoft hurt consumer choice by tying new applications to Windows. The 2004 decision ruled that Microsoft must offer a version of Windows without media player software and also provide interface information for the server operating system to competitors.

Microsoft had appealed in a long-running dispute with the EU, which had fined the software giant $689 million. The case dates back to 1998. According to UBS analyst Heather Bellini, Microsoft has already paid $1 billion in fines.

In a statement, Neelie Kroes European Commissioner for Competition Policy, said the following:

The Court has confirmed that Microsoft cannot regulate the market by imposing its products and services on people. The Court has confirmed that Microsoft can no longer prevent the market from functioning properly and that computer users are therefore entitled to benefit from choice, more innovative products and more competitive prices.

In confirming the interoperability part of the Commission’s decision, the Court has confirmed the importance of interoperability for consumer choice and innovation in high tech industries. If competitors are unable to make their products "talk to" or work properly with a dominant company's products, they are prevented from bringing new innovative products onto the market, and customers are locked into the products of the existing provider. Consumers want interoperable products, and companies that want to meet consumers’ demands should be able to provide them. In this case, the Court has confirmed that Microsoft has to make available indispensable interoperability information on reasonable and non-discriminatory terms to allow competitors to make workgroup server products that work properly and on an equal footing with Microsoft products. Consumers have a right to the increased choice and innovation, and the decreased prices that competition brings. Competition in this market requires interoperability. Companies should not practice interoperability only where they are forced to compete in a particular market, because that increases its chances of winning market share.

Microsoft can appeal on points of law, but not the facts of the case.

Microsoft General Counsel Brad Smith tread carefully, noting that the court was "objective" and that the company needed time to read the complete ruling. If Microsoft needs to change business practices it will, said Smith.

In a press conference, Smith said Microsoft was "100 percent committed to complying with the European Commission's decision." Smith added that some issues will have to be worked out. For instance, European regulators have said the prices Microsoft charges for communications protocols--1 percent of revenue of the product using it--are too high. Trade secrets are another issue that has to be weighed, said Smith.

Smith added that he was heartened by European regulators decision to allow Microsoft to sell a full version of Windows in Europe. Microsoft also sells a Windows N version, which doesn't include a media player.

Here's what Smith had to say in a statement:

It is nonetheless clear that the court has agreed with the Commission on a number of the Commission's points, and I do want to simply start by expressing our gratitude to this court for the lengthy consideration that it gave to these issues. These are obviously complicated and important topics, and we appreciate all of the objective and thorough work that went into the decision that was issued today.

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.

It's clearly very important to us as a company that we comply with our obligations under European law. We'll study this decision carefully, and if there are additional steps that we need to take in order to comply with it, we will take them.

It will take us a little bit of time, at least over the next few hours, to read the decision carefully, but certainly that is one of our strongest convictions as we go forward.

We have been working hard over the last few years to address these issues. Everyone agrees, for example, that the version of Windows that we offer in Europe today is in compliance with the Commission's 2004 decision, and I'm also gratified that we were able to have the kinds of constructive discussions with the European Commission last year that enabled us to bring to market Windows Vista in conformity with the Commission's 2004 decision.

In addition, there's obviously a lot of work that has gone into our efforts to comply with the Commission's terms with respect to communications protocols and our duty to license them, a duty that obviously was reaffirmed by the court's decision today. We've made a lot of progress in that regard, and yet we all have to acknowledge that there are some issues that do remain open.

As we read today's decision more carefully, we're hopeful that some aspects of it may add some clarity that will help us all implement these remaining parts of the decision. And as I said, if we need to take additional steps in order to comply with today's decision, we will do so.

Topic: Microsoft

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  • Another interesting quote

    [i]Recent years have certainly seen innovation in high technology markets - but largely in areas that Microsoft does not control.

    And another one:

    [i]You may hear scare stories about the supposed negative consequences of this ruling for other companies and for innovation on the market. The Commission notes that the Court itself has concluded that Microsoft failed to show that the decision would have a significant negative effect on its incentives to innovate. Let me be clear - there is one company that will have to change its illegal behaviour as a result of this ruling: Microsoft. Other companies will benefit from increased opportunities to compete, to the greater good of consumers.
  • They have 2 choice

    they can shut the frack up and comply or pack there stuff and leave
    • or appeal

      they have another appeal left.

      but from what Brad said, it sounds like they are going to comply fully.
      • Setting the standard

        [i]but from what Brad said, it sounds like they are going to comply fully.[/i]

        They always say that. It's just that Microsoft has issued a new standard for "compliance."

        While Europe works out the details of becoming compliant with the new standard, Microsoft will continue on its present course, if necessary paying the fines.
        Yagotta B. Kidding
        • Very true, MS maybe only appealed the EC to distract them as they move on

          to the next dirty tricks for which they may eventually be fined, but only after they have reaped all of the benefits.

          Remember, MS long ago reaped, and continues to reap, all of the benefits of incompatible media players. They have to be laughing.

          The only way in which this ruling hurts MS is the negative PR.
  • As in the US, MS will now live with the ruling and move to circumventing it

    and cranking up the PR and dirty tricks. Really, as was in the US, the penalties are a slap on the wrist. The most significant thing is the negative PR of MS being found guilty of abusing it's monopoly. Europe already has the highest usage of Firefox, with some countries over 50%, so that will only increase. Also look for increased OpenOffice adoption in Europe.

    But, do not underestimate the kinds of dirty tricks that MS can use such as OOXML and the propaganda campaigns to go along with it.

    The fight will be bloody.
    • Dirtiest trick possible would be to...

      ... provide a basic version of Windows Vista free in Europe for the price of manufacture and shipping. Then sell lots of optional add-ons. Keep those add-ons optional and very high quality. That would fit the European mentality: all life needs are free in European socialism, just pay most of your income as taxes, even taxes on thumb drives.
      • The quality of life in the EU is much better than the EU, and they are

        doing a much better job at reducing green house gas emissions. The taxes may be higher, but the quality of life and the salaries there make it a bargain.

        And, MS will not give away Vista in Europe. They make too much money on it, and they would not like competing on the merits with others in the add-on market.
        • Do you know what you are talking about?

          [i]The quality of life in the EU is much better than the EU (US?).

          Obviously not.
          John Zern
        • Having lived there..........

          and having friends there, what the heck are you taking about?

          Ya, it's great to have high $$$ salaries. It really sucks when you can fly to America 1st class, buy a product made in your own country (after it's been shipped to the USA), ship it back, and fly home 1st class, and pay less that it would have cost to stay home and buy it there because of the taxes (if you didn't have to pay taxes to "import" it).

          Free health care. Ya it's so great that when I was injured I flew home and had doctors operate on me who were getting paid to do so (and I could sue their pants off if they screwed up).

          Europe is a beautiful place and in many ways nicer than the USA. Crime is only one of the reasons. I was appalled when I came home.

          But, like they say, It's a nice place, but I wouldn't want to live there.
          middle of nowhere
      • How much do you actually know about Europe?

        As a 'European', I find that comment rather distasteful - I feel it is a ridiculous ruling that will confuse and is utterly pointless in many cases. Albeit, my experience in servers is limited but Linux/Windows/Mac servers seem to talk fairly well in my understanding and I have no interest in buying Vista N (in fact, I went for Vista Ultimate as I felt that I wanted all the options, and I would not be interested in a highly cut-down version of Vista [even as cut-down as Basic is already] is distasteful to me - I'd rather stick with the Premium/Business/Ultimate versions that are already there - my Gran wouldn't understand the concept of the N series, nor would the vast majority of casual PC users and they certainly wouldn't understand or want to have to pick and choose their components individually
  • I'll bet that verdict had the chairs flying in Redmond..

    My guess is that Ballmer had extra chairs brought in to allow him to throw two at a time. Perhaps he ran around the room screaming (ala monkey-boy) as well. LMAO!!
  • RE: Microsoft weighs options after EU defeat

    What happens when people don't play well with others?

    Eventually people stop playing with them.

    I've been pushing my local municipality to look into moving toward open source for many things. For the life of me I don't understand why they pay MS for all the seats to use WORD. Open office would do just as well for the word processing, spreadsheet capabilities. Ninety percent of what they use WORD for is doing letters. It would be a step to cut back on taxes.

    MS eventually will become a commodity and Bill G knows it. He's been banking money for the day it will happen and then he will retire.
  • Greater adoption of non-MS products

    Has anyone looked at how many overlapping and duplicate licenses you need to run terminal server.

    For each user, you need
    1) Windows licence (if using a Windows desktop)
    2) Windows server client licence
    3) Windows terminal server client licence
    and if the app you are hosting is based on SQL server, then
    4) SQL Server client licence.

    Add an Office licence per user, and boy, you are paying one helluva Microsoft tax.

    If the app I wanted would run on a Linux server, then I would be saving a small fortune.

    No wonder MS are not keen on interoperability
    • Plus...

      It's not per-user, but you also had to pay for the Windows Server license to begin with. They get you coming and going.

      Regarding the desktop license, we've had a good experience with Linux-based thin clients from Wyse. Still, many thin clients work with Win CE or XPE, so MS picks up a few bucks on the sale of each of those.
      • Those Wyse thin clients are great

        We use the Linux based ones the 5150's and s50's mainly. We use about 400 of those through out the organization. They seem to be fairly reliable (been using them for a few years now) and are pretty easy to set up and work on. There's plenty of software for them to run and they make great X-Terminals and a terminal services client. It's been a great cost saver for our organization. The unit costs about a third of the cost of a decent PC and it's about the same for the wyse dumb terminals it replaced. Basically, we're very happy using them with a linux server to run most of our locations.
    • Cut a few items

      [i]For each user, you need
      1) Windows licence (if using a Windows desktop)
      2) Windows server client licence
      3) Windows terminal server client licence
      and if the app you are hosting is based on SQL server, then
      4) SQL Server client licence.[/i]

      Try running thin clients at the desktop, with MS-only apps running in VM sessions on a server. Quite a few of those line items go away.
      Yagotta B. Kidding
      • I SO desparately wish that were true

        Microsoft is one step ahead of you.

        You DO need an office license for EVERY User, even though they are remotely logging in to ONE computer/server. The only place you might save a few bucks is in "concurrent users". If not everyone has to be logged in at once, then you only need as many licenses as there are users at any one time -- but that defeats the whole purpose of centralizing everything via thin clients.

        Damned if you do, damned if you don't.
  • RE: Microsoft weighs options after EU defeat

    This should effect their hacker funnels: IE and OE as well.
  • It's a good day when...

    ...MafiaSoft loses another round.
    Henrik Moller