European Union sanctions in its five-year-long antitrust case against Microsoft Corp. could have more of an impact on the software company's business than remedies handed down in the U.S. government's case, according to legal analysts, industry insiders and parties involved in the legal proceedings.
The European Commission, the EU's executive branch, in a widely expected ruling Wednesday fined Microsoft Corp. $603 million and required the company to offer a version of its Windows operating system without the Windows Media Player software within 90 days.
The Commission also ordered Microsoft to disclose within 120 days details of interfaces used by its products to communicate with Windows. The ruling does not require Microsoft to reveal its source code, however.
One of the benefits of this ruling, according to EU Competition Commissioner Mario Monti, is that it sets a precedent for other cases.
"Future cases, if they do materialize, will benefit from this precedent," Monti said in a press conference.
"The Commission is not prohibiting bundling per se," he noted. "Each case will be judged on its own merits. But today's decision has provided a framework that will allow the Commission to deal with future complaints in a quick and efficient manner," Monti said.
Microsoft officials were quick to decry the sanctions.
A settlement proposed by Microsoft called for bundling its Media Player alongside three competing media players in Windows, said company General Counsel Brad Smith during a conference call with media. Now, Microsoft will ask the European Court of First Instance to review the decision and stay or suspend the sanctions, particularly the order to create a second version of Windows, he said. Appeals processes could take until 2009 to resolve, he said.
He noted that removing Media Player from the operating system will break some aspects of Windows' operability, and will affect many Web sites that have been developed with code using the player.
Settlement talks broke down last week over demands from the Commission that Microsoft sign a legally binding commitment on future business practices, according to sources close to the case.
On the conference call, however, company Chief Executive Officer Steve Ballmer kept the door open for further discussions.
"We hope at some point to resume discussions and resume resolutions of issues," he said. "Every company should have the ability to improve products to meet the needs of consumers."
The Commission ruling was an "unnecessary step," according to Smith. "The U.S. government spent five years addressing (these) issues. It's sad that when the day came and went, we just moved across the Atlantic to have another day in court."
However, competitors and many legal analysts in the U.S. said that the settlement reached in the antitrust case by the federal government, joined by several states, has not had much of an effect.
The U.S. settlement was approved 2002, though Massachusetts is still appealing it. The remedies in the case, among other things, prohibit Microsoft from retaliating against computer makers or independent software makers that develop or distribute any software that competes with Microsoft "platform software" or "middleware." Middleware products were defined as software for browsing the Web, for instant messaging and for playing music and video files, as well as other products.