Microsoft and Europeans in Standoff; Restrictions Likely

  1. This 3/18/2004 New York Times article caught my eye! As I've stated numerous times in past threads here, I hold a "love/hate" point of view towards Microsoft.

    Read on. . . .
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    http://www.nytimes.com/2004/03/18/te...D-SOFT.html?hp

    Microsoft and Europeans in Standoff; Restrictions Likely
    By PAUL MELLER

    Published: March 18, 2004



    RUSSELS, March 18 - Microsoft and European Union regulators have failed in last-ditch talks to agree on an antitrust settlement, opening the way for restrictions on Microsoft's Windows product.

    ``We made substantial progress toward resolving the problems that had arisen in the past, but we were unable to agree on commitments for future conduct,'' the European Union competition commissioner, Mario Monti, said today. ``It was impossible to achieve a satisfactory result in terms of setting a precedent.''

    The ruling could set a legal precedent that might be used against Microsoft in future European cases.

    Mr. Monti said he would also propose a fine - expected to reach hundreds of millions of dollars - when his draft decision goes to the full European Commission, the European Union's executive branch, next Wednesday.

    The ruling won unanimous backing last week from the 15 governments that make up the union, so it is expected to pass easily.

    Mr. Monti held a brief meeting with Steven A. Ballmer, Microsoft's chief executive, on Wednesday morning, after spending four hours with him and Microsoft's chief lawyer, Bradford L. Smith, on Tuesday, a person close to the talks said.

    Another face-to-face meeting between Mr. Monti and Mr. Ballmer is ``unlikely,'' this person added.

    If no settlement is reached between now and next Wednesday, the European Commission is expected to adopt a ruling that finds Microsoft to be an abusive monopolist. The commission's order would force Microsoft to offer two versions of its Windows operating system in Europe: one with Microsoft's music and video software and one with Media Player stripped out of the operating system and sold separately.

    The ruling is also expected to order Microsoft to license more secret code in Windows to allow rivals to build software that works smoothly with Windows, and to fine Microsoft 100 million euros ($122 million) to 1 billion euros.

    To avert such a ruling, Mr. Monti is asking Microsoft to agree not to distort competition by bundling peripheral software programs in Windows in the future.

    ``Such a legal undertaking could simulate the effect of a precedent-setting legal ruling,'' said a Brussels-based lawyer close to the talks, adding that after making such a commitment in writing, Microsoft could be challenged on its motives for bundling other software into Windows.

    In addition to Media Player, Microsoft also bundles its Instant Messenger Service and Outlook e-mail program into Windows. It is also planning to bundle a search engine, which would compete with Google, later this year.

    The commission also declined to comment on what Mr. Monti is seeking from a settlement.

    Mr. Monti held a meeting with his team of antitrust officials Wednesday afternoon informing them of the tough stance he is adopting with Microsoft ahead of the ruling next week.

    One person present said the commissioner looked very confident. ``The support from the advisory committee meeting on Monday meant a lot to him,'' the person said, referring to a meeting of top regulators from the European Union's 15 member nations. Some of the national regulators at that meeting had urged Mr. Monti not to duck away from setting a legal precedent, the person said.

    ``Some of them said the ruling could be tougher,'' the person said. ``It looks like that's what Monti thinks, too. ''

    The bundling question is a major sticking point for the settlement talks. Microsoft argues that adding functions like Media Player to Windows is what computer users want and has based much of its business model around developing Windows in this way. It has also argued that to remove Media Player would harm Windows.

    The commission, as well as rival software makers, have argued that bundling programs like Media Player into Windows is anticompetitive, because it puts rival music and video players like RealOne Player by RealNetworks and Quicktime by Apple at a disadvantage.

    The second strand of the European Commission's case on licensing Windows code is expected to be easier to resolve, but people close to the talks said that this issue had not been resolved yet.
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