Microsoft dealt defeat in EU court; unsure about appeal

SEATTLE -- The European Court of First Instance rejected Microsoft's request to nullify sanctions handed down by the European Commission, including a record fine and an order forcing the software giant to adjust the way it sells its Windows operating system in Europe.

The ruling could embolden Europe's antitrust authorities to closely monitor how Microsoft and other big tech companies go about diversifying their product offerings. The court ruled against Microsoft's arguments that its software should be treated as intellectual property that changes rapidly, thus requiring a different approach.

"The ruling shows that the Commission was right to make its decision," says Neelie Kroes, Europe's antitrust commissioner. "Microsoft must now desist from engaging in anti-competitive conduct."

Kroes told reporters regulators want to see "a significant drop" in Microsoft's market share.

"Now consumers might have a real choice, and technology companies will have a much better chance to compete on the merits than ever before," said Thomas Vinje, a spokesman for the European Committee for Interoperable Systems, a consortium of Microsoft's rivals.

Microsoft has two months to appeal to Europe's highest court. But it can only do so on the matter of interpreting antitrust laws, not on the facts of the case. The commission hit Microsoft with a $613 million fine, which the company has paid, and ordered it to provide a version of Windows without the media player built in. It also ordered the company to make it easier for programs from rivals to run on its Windows server software.

Microsoft's general counsel, Brad Smith was non-committal about what the company will do next.

"As we read today's decision more carefully, we're hopeful that some aspects of it may add some clarity that will help us all implement these remaining parts of the decision," says Smith.