Sunday, September 16, 2007

Important EU Ruling On Microsoft Antitrust Case Scheduled For September 17th

EU to Rule on Microsoft Appeal
EU anxiety over Microsoft Ruling

The European Court of First Instance is scheduled to rule on Microsoft’s Appeal of a landmark 2004 decision on September 17th. It will be the largest antitrust case ever before the European Union’s second highest court.

In 2004, the European Commission found that Microsoft abused the position of Windows Operating System in order to move into other sectors of the software market – and ordered Microsoft to pay 497 million Euro in damages. In particular, providing Windows Media Player with Windows and not sharing information on how to work with Windows PCs provided the basis for ruling Microsoft competed unfairly with competitors like Real Networks Inc. and Apple Inc.

Microsoft appealed the 2004 ruling and the EU had a three-day hearing last April. While analysts see four possible results (see the PC World article), a mixed ruling is most likely. For example, the Commission may uphold Microsoft’s appeal of the bundling but rule for the Commission on interoperability. This would require Microsoft to release interoperability information to their competitors – essentially “flattening” the software market.

The stakes are high for both the commission and Microsoft. One official of the commission said: "If we lose this one, we're in deep (trouble). It would put in question our ability to regulate competition in high-tech industries.” A ruling against Microsoft would reduce their competitive advantages and uphold the damage ruling. Regardless, the outcome will set an important precedent in determining the commission’s ability to take up similar cases against dominant companies.

Questions for discussion:
1. After reading the PC World’s summary of the four most likely outcomes, what outcome do you expect to see?

2. Are the pundits overstating the importance of this ruling?

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