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Friday, October 01, 2004
Microsoft launches appeal against EU anti-trust ruling

Microsoft is to launch its legal appeal Thursday against a stinging EU anti-trust ruling, six months after it was fined nearly half a billion euros for abusing its market dominance.

Bill Gates's software titan initially will be pressing the European Union's top court to suspend measures ordered against it by the European Commission in March, although the case itself is expected to last years.

After a marathon competition inquiry, the commission decided that the company had to offer a version of its operating system Windows without its Media Player software offering access to audio and video content.

The commission, the EU's executive arm, also required Microsoft to provide competitors with the information they needed to enable their products to communicate with Windows.

The money from the fine has been paid into an escrow account, meaning it is held in trust and neither Microsoft nor the commission has access while the appeal is pending.

Microsoft has filed two suits: one seeking to overturn the March ruling, the other to suspend the "remedies" imposed by Brussels. The latter is the case due to be heard in Luxembourg on Thursday, Friday, and possibly into Saturday.

About 10 other firms will present their case, including companies like RealNetworks and Novell, while groups such as the Association for Competitive Technology (ACT) and the Computer and Communications Industry Association (CCIA) will also take the stand.

"This is another important week in the saga of the case," said Microsoft chief lawyer Brad Smith, conceding that to win a suspension of the EU-ordered remedies he will have to prove they will have irreparable consequences.

"The compulsory licencing of our intellectual property rights would undermine our ability to innovate in the future as well as the ability of many others," he said.

Specifically, unbundling Windows Media Player will prove disastrous, he said. "That is a precedent that is going to undermine European consumers and European competitiveness," he said in Brussels ahead of the court hearings.

Microsoft's rivals are fiercely opposed to any suspension of the measures ordered against it.

They argue that such a ruling would open the way for Microsoft to extend its dominance further.

"You've already seen them eliminate competition on the browser market," said CCIA lawyer Thomas Vinje, arguing that the bundling of software like Media Player is "the most anti-competitive weapon Microsoft has employed."

He notably voiced concern that, after audio and video software, Microsoft could use its dominance to similar effect for example in the mobile telephony software market.

The market for audio and video software markets "is an extremely important one, certainly, but not the last market that they will use this technique in," said Vinje.

Microsoft, while hoping for a positive ruling, says it is also prepared for the worst, said its chief lawyer.

"We obviously think that having to comply really would cause great harm not only to us as a company but to great many others in our industry... But nonetheless if we're ordered to comply we'll be in the position to to do so."

"We hope that the court might give us some relief and and we hope there will be a time in the future when again it will be possible to sit down and have face to face discussion," he added.

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