Microsoft lost a European Union court appeal today to delay sanctions that will force it to change business practices and immediately market a stripped-down version of Windows.
Court of First Instance President, Mr Bo Vesterdorf
The Court of First Instance, the EU's second highest court, upheld the penalties that were imposed by the executive European Commission in March.
The Commission had found the US software giant abused the virtual monopoly of its Windows computer operating system and levied a record fine.
"Microsoft has not demonstrated specifically that it might suffer serious and irreparable damage," Court of First Instance President Mr Bo Vesterdorf said. "The application must therefore be dismissed in its entirety."
Microsoft said it would comply as soon as it could, and from next month would sell computer makers a version of Windows without its Windows Media Player music and video software and also share secret specifications with rival makers of servers.
"We will move forward immediately to comply with today's decision," Microsoft General Counsel Mr Brad Smith said in a conference call with reporters.
The company had not decided whether to appeal against today's order, Mr Smith added.
Mr Vesterdorf's order was a setback to Microsoft's push for a negotiated settlement that could require the EU executive to rescind a major decision for the first time in its history.
Mr Smith nevertheless urged the Commission to consider fresh settlement talks, arguing the judge had found some merit in Microsoft's arguments on the substance of the case.
"Is there enough here for the Commission to restart settlement negotiations?" he asked. "There's nothing here to guarantee that either side is going to win at the end of the day."
But Commission competition spokesman Mr Jonathan Todd said the court decision upheld the effectiveness of antitrust action and the EU executive was "not in a process of renegotiation".
He noted that judges find some merit in 90 per cent of such cases, but that doesn't mean the appeal will prevail.
Microsoft stock opened at $26.83 in New York, down from a Tuesday close at $27.07.
"This is a victory for consumers," said Brussels lawyer Mr Thomas Vinje, who represented an industry group which dropped out of the case after a $20 million settlement with Microsoft.