BRUSSELS, Belgium – Microsoft Corp. will fight for the way it conducts future business next week as it urges the European Union’s second-highest court to overturn an antitrust ruling that ordered it to pay a record $613 million fine.
The world’s largest software company, and some of its rivals, argue that the right to innovate is at the heart of the case. Microsoft says it must be allowed to enhance its programs and guard its intellectual property. Critics argue it cannot be allowed to use its dominance to crush competitors.
“At issue is whether companies can improve their products by developing new features, and whether a successful company must hand over its valuable intellectual property to competitors,” the maker of the Windows operating system said in a statement.
In March 2004, the European Commission levied its largest fine ever, $613 million, after it found Microsoft guilty of breaking the antitrust rules that govern fair play in business.
Its five-year investigation concluded that Microsoft had taken advantage of its position as the leading supplier of operating systems to damage rivals who offered competing server software and media player programs.
The commission ordered Microsoft to share information and software codes with competitors to help them make software that works smoothly with Windows and to market a version of Windows without the built-in media player to give consumers a free choice of media software.
Microsoft challenged the penalties in court, but lost. It finally made a media player-free version of Windows available last summer.
However, in December the EU said the company had not done enough to help rivals develop compatible software and threatened Microsoft with daily fines of up to $2.4 million, backdated to Dec. 15. It has not yet decided whether it will levy these extra fines.
The five-day court hearing in Luxembourg next week will thrash out Microsoft’s behavior in the late 1990s, with EU regulators using evidence from RealNetworks Inc. on the media player case and IBM Corp., Novell Inc., Oracle Corp. and Sun Microsystems Inc. on systems compatibility.
None of those companies are currently involved in the legal battle, although they are members of two broad industry coalitions that back the commission, the European Committee for Interoperable Systems and the Software &Information Industry Association.
History speaks for itself, Microsoft officials contend. RealNetworks has survived despite Microsoft’s so-called antitrust abuse, it says. Apple has gained ground in Microsoft’s core desktop market with its media-friendly iMacs.
The company also says its actions have not stopped the server market’s adoption of Linux, the increasingly popular operating system developed by a global community of programmers.
In a new complaint filed in February, the European Committee for Interoperable Systems said times have changed, but Microsoft’s behavior has not. It claimed Microsoft is up to the same tricks, but on a wider scale.
Committee lawyer Thomas Vinje said the latest version of Microsoft’s desktop operating system, Windows Vista – due in stores early in 2007 – will attempt to further squeeze out rivals by giving away security, search engine and office functions.
Microsoft said it’s merely doing its job of introducing new products with breakthrough technologies that benefit consumers.
For Vinje, Microsoft vs. the European Commission has the potential to set the “rules of the road” for Microsoft before it launches Vista.
“The bottom line in this case is about the future, whether consumers will have the choice of that innovation in future or whether Microsoft will be allowed to contain competition and innovation,” he said.
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