Microsoft counters EC claims

Our deal was better for customers is the message from Microsoft following the European Commission’s decision to force it to offer alternative versions of its Windows operating system and allow rivals access to its source code.

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By  Peter Branton Published  March 25, 2004

Our deal was better for customers is the message from Microsoft following the European Commission’s decision to force it to offer alternative versions of its Windows operating system and allow rivals access to its source code. On Wednesday, the EC found Microsoft in breach of European competition law by leveraging its virtual monopoly in the desktop operating system market to affect its standing in the media player and workgroup server markets. While it also fined the company 497 million euros, it is the decision that Microsoft must provide a version of Windows without Media Player bundled, and that it must give rival companies more information about the OS that rankles. Microsoft had fought hard to prevent this decision, with CEO Steve Ballmer meeting EC commissioner Mario Monti personally last week, but the talks proved fruitless. “We worked hard to provide an agreement that would address the European Commission’s concerns and still allow us to innovate and improve our products for consumers,” Ballmer said in a statement released immediately after the decision was announced. “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.” Microsoft had offered to ensure that every PC sold with Windows installed would also come with a choice of three non-Microsoft media players. It also offered to make that deal worldwide, which would make more than one billion media players available on the market in the next three years. While Microsoft is saying that it respects European law, it is also making it plain that it will contest this decision, with the company saying it will seek legal review of the decision in the Court of First Instance. Crucially, it is also seeking to have the proposed remedies put on hold until that case is heard, which could take years. While it has been given 90 days to comply with the decision to unbundled Media Player, and 120 days to comply with the ruling on providing more information on Windows to competitors, these could be put on hold before then. The company’s stance has won support from analysts. “Gartner believes that Microsoft’s proposed settlement in this case would’ve better addressed customer concerns,” it told clients in an advisory. The EC had created uncertainty in the marketplace, it said: “For example, should Microsoft add other functionality to Windows, such as telephony or antivirus protection, would that move trigger EU review and the need for EU approval?”

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