Microsoft to appeal against EU sanctions

24 Mar 2004

Microsoft’s legal counsel said today following the landmark decision on the software giant’s abuse of market power in the EU that the company will appeal a number of the sanctions imposed by the European Commission within 70 days by seeking a review of the decision in the Court of First Instance in Luxembourg.

The European Commission this afternoon fined the software giant €497.2m for abusing its market power in the EU as well as giving the company 120 days to provide rival vendors with the interfaces to make Windows interoperable in the work group server market as well as 90 days to offer PC manufacturers a version of Windows without Windows Media Player.

Brad Smith, senior vice president at Microsoft and the company’s legal counsel said in a conference call this afternoon that the settlement proposals discussed when CEO Steve Ballmer met EU competition commissioner Mario Monti last week would have been better for consumers, businesses and developers not only in Europe but across the world.

“We think this decision is unfortunate, but respect the Commission’s decision and will now move forward with the next steps. We are hopeful that we can resume the discussions we had with the Commission last week. We believe our settlement proposals would have gone further to protect consumer choice. We made considerable concessions in terms of interoperability and would have provided unprecedented access to our technology.”

Under the settlement proposals offered by Microsoft, it was proposed that every PC would have contained three competing media players. “This would have resulted in the distribution of over one billion media players to PCs around the world within three years,” Smith told journalists. “This would have made today’s action [by the Commission] unnecessary.”

“We have acted responsibly while seeking to build the best products we can to meet the needs of our customers,” Smith said. “We believe that the Commission’s decision would actually reduce consumer choice and hurt European software developers.” He added: “We want to resolve these issues as quickly as possible, and we look forward to the possibility of continuing these discussions as this case moves forward.”

Smith told journalists: “Today’s decision is not, in our view, likely to provide potential distribution benefits envisaged but will punish consumers and developers. It will break certain features in Windows as well as in websites with third party applications. Even in a PC installed with RealPlayer, there will still be 20 features in Windows that simply will not work. This includes websites that are well known across Europe, including those of BskyB and the Swedish Parliament.”

When asked will Microsoft appeal the European Union’s decision, Smith said: “First we will go forward and pursue a review in the European Court of First Instance. We will need to review the decision and will ask them to sustain or suspend some of the sanctions imposed today. We will ask the court to suspend the part of the order that will require us to produce a second version of Windows. We will ask for that and other parts of the remedy to be suspended.”

Smith said that the sanctions will take place in 90 and 120 days, respectively. “Our brief to the Court of First Instance will have to be filed within 70 days. After that we will file a request for the court to stay the sanctions.”

Commenting on today’s decision, the CEO of Microsoft, Steve Ballmer said: “We worked hard to reach an agreement that would address the European Commission’s concerns and still allow us to innovate and improve our products for consumers. We respect the Commission’s authority, but we believe that our settlement offer from last week would have offered far more choices and benefits to consumers.

“Throughout this process we have cooperated fully with the European Commission and demonstrated due respect for the process and its concerns,” said Ballmer. “As this case moves forward, you can rest assured we will respect and comply fully with European law, we will continue to invest in new technology breakthroughs, and we will continue to work to bring our innovations to our partners and customers.

“While we think today’s action is unfortunate, we will continue to cooperate and collaborate with European governments and the European industry to address shared concerns, such as interoperability, security, privacy, spam and keeping our children safe online,” Ballmer said.

By John Kennedy

Pictured is Microsoft’s Bill Gates