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Posted on Thu, Dec. 23, 2004

EU court orders Microsoft not to delay changes

The software firm must give up some trade secrets and make Windows with no music and video player.

From Inquirer Wire Services

A European Union court ordered Microsoft Corp. yesterday to immediately divulge some trade secrets to competitors and to produce a version of Windows software without a music and video player.

The 91-page ruling thwarts Microsoft's attempt to delay, pending appeal, implementation of the EU's landmark antitrust decision in March that demanded changes in the software giant's business practices.

The decision may restrict Microsoft's ability to add features to Windows and hurt its efforts to fend off competitors in Europe, which accounts for about one-third of the company's sales.

The EU said the order would prevent Microsoft from quashing rival products, such as the free Linux operating system and RealNetworks Inc.'s media player.

"This is a very serious setback for Microsoft," Nicholas Economides, an economics professor at New York University, said. "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 said the ruling still contained some encouraging comments, which could help reopen settlement talks with the European Commission.

"There is ample room for us to continue to press forward with cause for optimism," Microsoft counsel Brad Smith said.

The Redmond, Wash., company did not immediately say whether it intended to offer a version of Windows without the Media Player in Europe alone or more broadly around the world. Software that plays media files is increasingly in demand as more consumers get broadband connections to the Internet and use their PCs as entertainment centers.

There is also the question of precisely what computer code Microsoft will share with competitors so that those companies' programs work better on networks run by Microsoft server software.

In yesterday's ruling, the European Court of First Instance in Luxembourg said Microsoft "has not shown that it might suffer serious and irreparable damage as a result of implementation of the contested decision."

"Microsoft's application for interim measures is therefore dismissed in its entirety," the president of the court, Judge Bo Vesterdorf, said.

The EU was buoyant, since its ruling was fully upheld and would force immediately compliance from Microsoft.

Microsoft said it would look closely at the order before deciding on its next step but would comply fully with the court order when it came into force. The full appeals process could take up to five years.

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