22 December 2004 A European court has ruled that penalties imposed by competition regulators on Microsoft should be upheld, dashing the software giant’s hopes that a suspension would be granted while its main appeal is fought out over the next several years.
The ruling means that Microsoft must now comply with a March 2004 order instructing it to reveal parts of its source code to work-group server manufacturers, and to produce a version of its Windows platform that does not come bundled with its Media Player. Microsoft must also pay a record €497m fine.
In giving its judgement, the Luxembourg-based European Court of First Instance said that Microsoft had failed to demonstrate it would suffer “serious and irreparable damage” if the penalties imposed on it were enforced prior to a full appeal.
The new ruling will come as a serious blow to Microsoft, which will, for the first time ever, have to produce different versions of its mainstream products for the European and US markets. Alternatively, it could produce European-compliant versions globally.
To date, none of the anti-trust cases that Microsoft has been involved in, either in the US or Europe, has resulted in significant product modifications.
Although the decision by the Court of First Instance is merely the latest stage in the long-running battle between Microsoft and European regulators, Microsoft executives will be disappointed that the penalties were not suspended. Although Judge Bo Vesterdorf’s ruled that Microsoft’s has some grounds for an appeal, this could take up to five years to be heard. By then, the issue of source code access, and of bundling or unbundling its media player, may be of little importance.
In the meantime, the ruling opens some interesting questions, not least of which is the legitimacy of bundling software together to reduce complexity, said Philip Carnelley, research director at analyst company Ovum: “Until this time, bundling was the clear winning strategy because it played to desire for less complexity and management overhead in their computer systems. The EU has changed the ground rules and it’s not clear who the winners will ultimately be.”
