Microsoft Loses Case Appeal and Fined $600M++

September 17th, 2007 at 12:00 am


So here’s the buzz over from Europe.  Microsoft was in a court battle with the European Commission who were accusing  Mirosoft of monopolizing the market delibrately by locking out information and not sharing their stuff.

"The European Court of First Instance has upheld the ruling that Microsoft abused its dominant market position with its operating system and Windows Media Player, freezing out competitors by not sharing information in order to make the software compatible. As Microsoft did not adhere to this initial decision three years ago, it was ordered to pay a daily fine that amounted to about $690 million. " (Mashable)

That’s it in a nutshell.  What I do not understand however is how can there be penalties like this with software? Isn’t it the program makers discretion whetheer to share the code or not? Or even allow their program to run on other platforms?  Any which way, here are some highlights justifying the court’s decision:

"Interoperability. The court agreed with the Commission that Microsoft was stifling competition by withholding certain technical specifications, or protocols, from rivals. The court also agreed that the Commission wanted Microsoft to share only the system protocols, and not its source code. After all, not everyone wants to be "like" Microsoft.

"The court rejects Microsoft’s claims that the degree of interoperability required by the Commission is intended in reality to enable competing work group server operating systems to function in every respect like a Windows system and, accordingly, to enable Microsoft’s competitors to clone or reproduce its products," the Court of First Instance stated in its decision.

The decision further noted that "the court considers that the Commission was correct to conclude that the work group server operating systems of Microsoft’s competitors must be able to interoperate with Windows domain architecture on an equal footing with Windows operating systems if they are to be capable of being marketed viably–the absence of such interoperability has the effect of reinforcing Microsoft’s competitive position on the market and creates a risk that competition will be eliminated."

Bundling. The court upheld the Commission’s decision that Microsoft was bundling two products together–the Windows operating system and its Windows Media Player–as a means to lock out competition.

"The court considers that the factors on which the Commission based its conclusion that there was abusive tying are correct and consistent with Community law."

The decision was based on four factors, which, in court parlance, are as follows: the concerned company must have a dominant position in the market for the tying product (the Windows operating system, in this case); the tying product and tied product (Media Player) must be two separate products; consumers don’t have a choice to obtain the tying product without the tied product; and the practice must foreclose competition." (Webware)

And the fine, $690Million.  This figure is an accumulated amount of a daily fine imposed by the court 3 years ago.