Dec. 22 (Bloomberg) -- Microsoft Corp. must sell a version
of Windows without a music and video player and license
proprietary information to competitors after a European Union
court rejected the company's bid to suspend an antitrust
The world's largest software maker's request to delay the
commission's measures pending an appeal was ``dismissed in its
entirety,'' Bo Vesterdorf, president of the European Court of
First Instance in Luxembourg, said today.
At issue is how far Redmond, Washington-based Microsoft can
go in adding features to Windows, which powers more than 90
percent of the world's personal computers. The EU says the
order will prevent the company from quashing competing
products such as the free Linux operating system and
RealNetworks Inc.'s media player. Europe accounts for about a
third of Microsoft's sales, which were $36.8 billion in the
year ended June 30.
``This is a very serious setback for Microsoft,'' Nicholas
Economides, an economics professor at New York University,
said in a telephone interview. ``It's the first time that a
court has told them what they can and can't include in
Windows. It's like telling General Motors what features it
should have in their cars.''
Microsoft General Counsel Brad Smith said on a conference
call that the company will comply immediately with the order.
A version of Windows that meets EU demands will be available
through software resellers by February, he said in an
Microsoft shares trading in Germany fell 22 cents to $26.85
as of 11:39 a.m. in Frankfurt. The shares rose 12 cents to
$27.07 yesterday in Nasdaq Stock Market composite trading.
Microsoft said the judge's ruling today may help it in its
appeal of former Competition Commissioner Mario Monti's
``We are encouraged by a number of aspects of the Court's
discussion of the merits of the case,'' Microsoft said in an
e- mailed statement. ``While the Court did not find immediate
irreparable harm from the commission's proposed remedies, the
court recognized that some of our arguments on the merits of
the case are well-founded and may ultimately carry the day
when the substantive issues are resolved in the full appeal.''
Monti also imposed a record 497 million-euro ($666 million)
fine as part of his decision on the case, which began with a
complaint by Sun Microsystems Inc. in December 1998. In July,
Microsoft said it had paid the fine into a blocked escrow
account managed by the commission's budget department.
The ruling won't have an immediate effect on Microsoft's
business because most computer makers will buy the version of
Windows with the media player, said New York University's
``It's a business practices issue rather than a
money-losing issue,'' he said.
In the 91-page judgment, the court president said
Microsoft's assertion that it would suffer tens of millions of
dollars of damages if it is forced to release information on
how its products communicate with servers ``is not supported
by any evidence.''
The financial damage ``cannot be regarded as serious, owing
to the financial power of Microsoft,'' Vesterdorf said.
Horacio Gutierrez, Microsoft's top lawyer in Europe, argued
in June, when the company appealed the commission's decision,
that the antitrust ruling forces the company to give up trade
secrets and intellectual property.
A Microsoft spokesman yesterday reiterated that the company
would prefer a settlement rather than a lengthy appeals
process. The commission today said the ruling backed its case.
``The commission is confident regarding the sound legal
basis of the March 24 decision,'' commission spokesman
Jonathan Todd said at a press conference in Brussels. ``The
point of the remedies is to improve consumer choice and
improve the level of competition in the markets.''
Microsoft said it will comply with the measures while it
continues to the commission's March antitrust ruling. The
company said it hasn't decided whether to challenge today's
decision to the European Court of Justice, Europe's highest
court, which can only be done on a point of law.
``We're very focused on complying with our obligations at
least until the time our appeal can be heard by the court,''
Tom Burt, corporate vice president and deputy counsel at
Microsoft, said in an interview. ``We're probably talking a
year to two years before the court hears our appeal on the
merits,'' Burt said.
European regulators were forced in August 2003 to drop an
order against IMS Health Inc., the world's biggest seller of
drug- market data, in another case involving intellectual
property rights. Vesterdorf's court had suspended the order
for IMS to license its data-collecting methods to competitors
in October 2001 -- three months after it was issued.
In both the IMS and Microsoft cases, regulators are trying
to break down barriers in markets dominated by a single
company through trademarks and copyright.
``The court's refusal to allow Microsoft to continue its
illegal conduct is a significant victory for the commission,
consumers and ultimately RealNetworks,'' Dave Stewart, deputy
general counsel for RealNetworks, said in an interview.
``Microsoft's bundling is a central part of their business
The case is T-201/04, Microsoft Corp. v Commission of the