September 17, 2007

Microsoft has lost its appeal in a long-standing case in European courts against the software giant.

Today Microsoft lost its antitrust appeal when the European Court of First Instance ruled to uphold European Commission's ruling against Microsoft. Microsoft is now expected to have to pay a massive $690 million (€497 million) in fines.

The European Commission accused Microsoft of using underhanded tactics to freeze out its competitors in the media player and server software markets. In 2004, Microsoft was ordered by EU antitrust commissions to make its media player software compatible with other company's products and to desist in its practice of locking other companies out of its software.

In July DailyTech reported that the EU did not feel Microsoft had complied with the 2004 ruling. Competition Commissioner Neelie Kroes went on the record to state, "Microsoft has still not put an end to its illegal conduct. I have no alternative but to levy penalty payments for this continued noncompliance."

The fine was initially $375.4 million, but Microsoft's refused to comply and instead took the case to court. Because of this the fine was nearly doubled to $690 million.

Microsoft was also ordered to pay 80% of the Commission's legal expenses. The Commission has to pay a smaller undisclosed amount of Microsoft's legal expenses.

However, the court criticized the Commission's recommendation of employing a full-time, all-access independent monitoring trustee. The trustee would be able to visit Microsoft premise, have full access to source code and be able to interview Microsoft employees. The court felt that this provision was not reasonable, but it only went as far as to criticize it on the record.

Microsoft politely stated in a press release today that it appreciated the court's decision and the work the court put into it. With regard to the monitoring trustee issue it said:
“We appreciate the court’s judgment on the trustee issue and the monitoring mechanism, an issue where the court agreed with us, and yet I would be the first to acknowledge that I don’t think anyone would say that is the most important part of this case or this decision."
Microsoft seemed somewhat resigned in the press release; which it concluding by stating:
“So, we look forward to continued efforts to implement and comply with today’s decision, we welcome the opportunity for continued discussion to adhere to our duties with the European Commission, and we look forward to hopefully continuing to move technology forward to create more jobs on this continent."
Microsoft said it is not currently sure what its next legal steps will be in trying to comply with EU competition law. This ruling marks one of the largest against Microsoft and is a major victory for the EU's Competition Commission.