Microsoft to appeal Commission ruling

Microsoft, the software firm which employs 1,300 staff in Dublin, indicated yesterday that it would appeal a European Commission…

Microsoft, the software firm which employs 1,300 staff in Dublin, indicated yesterday that it would appeal a European Commission ruling that it has abused its dominant position in the marketplace to the courts.

The ruling, which will be formally adopted next Wednesday by the Commission, is expected to levy hundreds of millions of euro in fines on Microsoft and force changes to its business model.

Attempts to negotiate a settlement between the parties ended in failure yesterday as days of talks between Microsoft chief executive Mr Steve Ballmer and Competition Commissioner Mr Mario Monti ended in deadlock.

Microsoft Ireland, one of the Republic's biggest technology employers, last night sought to reassure customers and staff that the ruling would not have a material impact on its business.

READ MORE

Mr Joe Macri, Microsoft Ireland's managing director, said the firm was clearly disappointed that it had not come to a settlement with the Commission. But he said the expected decision would not affect Microsoft's development, operations or sales functions at offices in Dublin.

The EU decision will require Microsoft to supply a second version of its popular Windows operating system stripped of built-in audiovisual software. Brussels will also order the company to share proprietary information with rival server makers and levy a fine running to hundreds of millions of euros.

Microsoft's legal counsel, Mr Brad Smith, said it was just another step in a long process. "Perhaps the courts will provide the clarity that is necessary to resolve these issues," he said.

The Commission's decision comes after a decade of probes and legal battles, including several cases in which the Commission took action to prevent Microsoft from using its dominant position to crush its smaller rivals.

This time the Commission wanted a binding promise from Microsoft to change the way it does business in Europe, putting an end to a pattern of bringing one case after another and getting new settlements each time.

"I'd just like to inform you that a settlement on the Microsoft case has not been possible," said Mr Mario Monti, as he made a surprise appearance at the EU executive's daily news briefing.

Mr Monti met Mr Ballmer three days in a row, once for four hours, to discuss the ruling.

"We were unable to agree on principles for new issues that could arise in the future," Mr Ballmer said in a statement.

A major issue in the case had been Microsoft's efforts to damage rival makers of audio-visual software by allegedly tying its Windows Media Player to the Windows operating system.

Microsoft was willing to go further than a Commission plan requiring it to supply a second version of Windows stripped of built-in audiovisual software. But, in Mr Monti's view, the heart of the case went deeper than today's problems.

Two more Microsoft cases are already under investigation, again focusing on the question of abuse of monopoly power.

Next Wednesday Microsoft will be formally held to have abused its dominant market position in the European Union, as it was in a 2001 final appeals court ruling in the United States.

Microsoft has made clear that it will appeal the decision to the courts, setting in train a process that could take years to decide. In the US, Microsoft has agreed to pay more than $2 billion to settle class-action lawsuits, filed in the wake of its antitrust settlement with the US government.

But the firm still faces anti-trust suits initiated by rivals RealNetworks and Sun Microsystems. - (Additional reporting, Reuters)