EU upholds penalties against Microsoft

Judge orders company to unbundle Windows Media Player and to share server technology. Appeals aren't over yet, though.

A European court on Wednesday dealt a blow to Microsoft, ordering the company to start offering a version of Windows without a bundled-in media player.

Bo Vesterdorf, president of the European Court of First Instance, said that Microsoft must comply with penalties imposed by the European Commission in March even as the company's appeal wends its way through the system.

Special coverage
Ruling requires software
giant to unbundle Media
Player from Windows
and pay a massive fine.

The Commission ruled in March that the software giant used its monopoly in operating systems to try to manipulate the markets for media players and work group server operating systems. It ordered the company to offer a version of Windows without its bundled media player and to share more technical detail with rivals--orders that will now go into effect.

"The evidence adduced by Microsoft is not sufficient to show that implementation of the remedies imposed by the Commission might cause serious and irreparable damage," the court said in a statement.

The company, however, has the right to appeal Wednesday's decision to the president of the European Court of Justice. Any appeal would have to be lodged within the next two months.

Microsoft hasn't yet decided whether it will appeal the ruling, general counsel Brad Smith said during a conference call on Wednesday.

"We don't know whether we will appeal. I don't think it will take two months, but I think we should take enough time to decide whether to do that," he said.

Brad Smith
general counsel,

Smith told reporters he remained optimistic that the company still had a good chance to win out on the merits of the case.

"The court nonetheless recognized we have a number of arguments that are important and will need to be weighed seriously and could well win at the end of the day," he said. He later added that "I'm not suggesting that victory is guaranteed, but there's clearly cause for optimism as we see the litigation path moving forward."

For instance, "the court recognizes there's an important question in respect to Microsoft's argument that the Commission should have given more weight to the positive effects (of the combination)," he said.

Smith said that the company would act immediately to begin addressing the ruling. Microsoft plans to set up a Web site later Wednesday so that the company's competitors will be able to begin licensing various communications protocols specified in the ruling.

While some of Microsoft's protocols are already available for licensing, the ruling covers a new category of communications protocols in the Windows server.

Smith said the company does have some experience with this, pointing to the company's consent decree with the United States government.

The company will also continue working on a special version of Windows, excluding Media Player, for the European market. That

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