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EU set to decide Microsoft’s fate

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CIOL Bureau
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David Lawsky



BRUSSELS: European regulators will on Wednesday slap Microsoft with a record fine and tell it to change the way it does business in Europe so that it will stop crushing software rivals.

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The ruling, which the European Commission says is a blow for consumers, goes further than a negotiated settlement on the firm's home base of the United States that critics deemed insufficient.

The 20-member Commission is set to meet at nine a.m. (0800 GMT), for a decision that is expected to be announced within a few hours after the meeting. Competition Commissioner Mario Monti planned a news conference after 12:15 p.m. (1115 GMT) to discuss the decision.

The Commission was expected to fine Microsoft 497 million euros. It planned to order the software giant to offer a version of its Windows operating system without Windows Media Player and to encourage computer makers to provide other audiovisual software.

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The Redmond, Washington-based company, must also license information to make the servers of rivals more compatible with Windows desktop machines. Windows runs more than 95 percent of all personal computers.

APPEAL CERTAIN



Microsoft has said it will take the decision to European Union courts in Luxembourg and try to get the remedies delayed until final appeals are over, a process that could take four to seven years or more.



Although that limits the impact of the decision, the Commission has shown no inclination to slow two other investigations of Microsoft it now has underway.

It will be able to cite the precedent from its decision on Wednesday in bringing the next cases, easing the way for quicker action, experts say.



The decision to go for a broad remedy follows a decade of investigations and settlements on narrow issues without any formal findings against the software firm.

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A U.S. appeals court ruled unanimously in a final 2001 decision that Microsoft broke antitrust rule, but critics say the remedies there failed to encourage vigorous competition.

FIGHTING FOR CONSUMERS



EU Competition Commissioner Mario Monti explained to reporters last week that his decision was based on what was needed for the European marketplace.



"In the end, I had to do what was best for competition and consumers in Europe," he said. "I believe they will be better served with a decision that creates a strong precedent."

The Commission fine exceeds the record 462 million euro penalty imposed on Switzerland's Hoffman-La Roche AG in 2001 for leading a vitamin cartel.



Nonetheless, it amounts to slightly more than one percent of Microsoft's roughly $53 billion cash on hand. On January 22 it projected expected revenues of $8.6 billion and operating income of $3.1 billion for the current quarter.

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Microsoft has three months to pay the fine but may instead give a bank guarantee during the appeal. If it ends up losing, it would owe the fine plus interest.



In addition to the fine, two remedies requiring Microsoft to change its behaviour will be approved on Wednesday.

One will require that Microsoft's licenses at a reasonable fee more information so that rival makers of low-end servers can make their software as compatible with the Windows operating system as Microsoft's own servers.

The other will require it to sell two versions of its Windows XP operating system to computer makers, one stripped of audiovisual software.



The Commission argues that Microsoft has bundled an audiovisual player to damage such rivals as RealNetworks RealPlayer and Apple Computer Quicktime.



(C) Reuters

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