Ballmer: All companies should be allowed to innovate

Microsoft Chief Executive Steve Ballmer vows to fight the European Commission's antitrust ruling, arguing that all companies, even ones with a near monopoly, have a right to improve their products.

Microsoft Chief Executive Steve Ballmer vowed to fight the European Commission's antitrust ruling, arguing that all companies, even ones with a near monopoly, have a right to improve their products.

Ballmer's comments follow a decision by the European Commission earlier Wednesday, which involved ordering Microsoft to offer a version of Windows that comes without the Windows Media Player and to share enough of its intellectual property to enable server industry rivals to sell machines that can effectively interoperate with Windows-based computers. The commission also imposed a record $613 million fine against the software behemoth.

"There is an important principle at stake in this case: We believe that every company should have the ability to improve its products to meet the needs of consumers," Ballmer said during a conference call with journalists. "We recognize the sort of special position our company has, but nonetheless we think we should have that ability to improve our products, subject to the appropriate guidelines."

Long arm of law reaches back far with Microsoft
The European Union case is just the latest in a lengthy line of antitrust-related battles involving the software behemoth. Some have been settled; others still hang over the company's head.

Pending cases:
Minnesota consumer class action
The case: Consumers in Minnesota are seeking up to $425 million in damages as part of a class-action lawsuit.

What's next: The case is in trial--the first such case to make it to a jury--and the proceedings are expected to last another 2 to 3 months.

The case: A private antitrust claim on behalf of Windows 98 users was initially dismissed but was by the Nebraska Supreme Court.

What's next: Now that the state's high court has reinstated the case, it will be sent back to the trial court for a rehearing.

Sun Microsystems
The case: Sun filed suit in March 2002, charging Microsoft with various antitrust and unfair competition violations, along with copyright violations. Sun initially got a fairly broad injunction against Microsoft, though an appeals court narrowed that last summer, ruling that Microsoft need only stop distributing its own Java Virtual Machine.

What's next: The case is set to go to trial sometime next year.

The case: Real sued Microsoft in December 2003 for alleged antitrust violations, seeking damages that Real estimates could exceed $1 billion.

What's next: Microsoft recently lost a request to have the case moved from San Jose, Calif., to Seattle, and now, the case appears to be headed to the pretrial discovery phase.
The case: In this 2002 suit, Microsoft is accused of bullying customers so that they don't use video-streaming technology from Microsoft is also charged with infringing on Burst's patents.

What's next: The case is still in the pretrial discovery and motions phase. A trial date has not yet been set.

Settled cases:
Department of Justice and state attorneys general
A federal judge initially ruled in June 2000 that Microsoft should be split in two for abusing its monopoly in the operating-system market. That order was overturned on appeal a year later, though the company was found to have violated antitrust laws. A settlement was reached that imposed some restrictions on Microsoft's business practices, though Massachusetts has been seeking to have stricter penalties imposed.

AOL Time Warner
In May 2003, Microsoft agreed to pay $750 million to AOL Time Warner (now Time Warner) to settle a range of litigation, including the antitrust action Netscape Communications brought against Microsoft.

Microsoft paid Be $23 million plus attorney's fees to settle a lawsuit from the defunct OS rival, which had already sold its assets before reaching a pact with Microsoft.

State antitrust suits
Microsoft has already settled 10 lawsuits with various states and the District of Columbia. A number of others have been dismissed, and a few are still pending.

As a result, the company said, it plans to appeal the case to the European Court of First Instance in Luxembourg and will also ask that court to put on hold most, if not all, of the remedies ordered by the European Commission.

Microsoft executives tried to make the case that the European ruling, if it comes to pass, will hurt consumers.

"Even if one takes away the multimedia code and, as RealNetworks has suggested, installs their player in its place, there will remain over 20 features in the Windows operating system that will not function," Microsoft's chief lawyer, Brad Smith, said during the conference call. "There will remain many European Web sites that will not function properly."

Smith noted that the same competitors that sought action from the European Commission had already tried and failed to get a similar action from U.S. courts.

"Our competitors had their day in court, and it's unfortunate that after that day came and went they simply chose to move across the Atlantic to try to have a day in another court," Smith said.

The ruling is not expected to immediately change the way Microsoft thinks about its future products, including Longhorn, the next major revision to Windows.

"We're not doing anything different than we were yesterday in terms of how we think about new design," Ballmer said. Both he and Smith noted that Microsoft's development efforts already have been influenced by the consent decree in the U.S. v. Microsoft case.

"We've had lawyers already giving legal advice to our development teams about the development of future versions of Windows," Smith said. "That advice would change if, and only if, the European Commission is now saying that the law in Europe is now different than the law in the United States."

A Microsoft representative said the company would have to review the details of the ruling to see exactly how its current and future products might be affected.

Although Microsoft and the European Union appear to be at loggerheads on the issue of future development, Ballmer indicated that there could be an opportunity to settle the case once a European court has weighed in, noting that that's what transpired in the U.S. case. Smith pointed out that there were extensive settlement talks that failed to reach a pact in 1999 but that parties were able to find middle ground within a few months after an appeals court issued its decision in the summer of 2001.

"One can never predict the future, but it would not surprise us if the path in Europe were to follow something similar to what we saw in the United States," Smith said.

Nonetheless, while Ballmer and Smith said the company remains open to settling the case, Microsoft signaled it is also prepared for a long litigation process.

"At the end of the day, we do believe there are important principles at stake," Smith said. "Even though the litigation process may well last four or five years, we think those are principles that are worth standing up (for) and defending."

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