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Microsoft focus on Brussels after US decision

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CIOL Bureau
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By David Lawsky



BRUSSELS: After a court victory for Microsoft in the United States, the battle now shifts to Europe where Competition Commissioner Mario Monti may soon impose his own set of sanctions against the software giant. Monti will make a preliminary decision by the end of the year whether to act against Microsoft Corp for allegedly abusing dominance in its Windows operating system.



U.S. District Judge Colleen Kollar-Kotelly on Friday endorsed Microsoft's anti-trust settlement with the United States Justice Department and nine states. The agreement sets remedies for Microsoft's illegal abuse of monopoly power, which an appellate court found it used to compete unfairly.



A Microsoft representative said that in the interests of trans-Atlantic consistency, the company hopes the U.S. decision will become a reference point. "Legally they (the European Commission) are free to do whatever they deem appropriate," said Horacio E. Gutierrez, associate general counsel for Microsoft in Europe. But, he said, "We think that in the interests of trans-Atlantic consistency we hope they would weigh these decisions with the other facts before them." He said it is conceivable the Commission might take steps inconsistent with Kollar-Kotelly's decision.



"We are looking forward to continuing the dialogue with the Commission," he said. A strong critic of Microsoft said the Brussels case is different and the Commission must act independently. "The settlement does not reach over to do anything to cure the problem in Europe," said Ed Black, president of the Computer and Communications Industry Association in Washington. Critics of Microsoft expect Monti to take some fresh steps, but no one knows what they will be.





"The question is whether he does something serious -- is it real or is it fluff?" said a lawyer critical of Microsoft. Critics believe Kollar-Kotelly's decision approving a compromise between Microsoft and the Justice Department did little to improve competition.



EU's Microsoft case



EU officials have always said their case was different from the U.S. Justice Department approach. On the other hand they've also said that before acting they wanted to see what the judge's ruling would be. The European Commission says that Microsoft bundles its Media Player with its ubiquitous Windows operating system, putting rivals such as RealNetworks and Apple Computer's QuickTime at a disadvantage.



The software plays music and shows videos, but it also serves as a platform to run other software. The Commission alleges software writers will prefer to design for the player included in Windows, making it hard for others to compete. In a second charge, Brussels says Microsoft designed Windows to work best with its own server software, hurting competitors who use Linux or other versions of the Unix operating system.



Kollar-Kotelly, recognizing the problem, changed the U.S. settlement to require Microsoft to disclose technical information to rivals. She said she was acknowledging the "competitive significance of the server/network computing as the most significant 'platform threat' to Microsoft's dominance."



But Microsoft critic Black said the judge failed to solve the problem. He said Microsoft deliberately designed programs to sit partially in Windows and partially in its servers.



Companies need Microsoft servers to take full advantage of the Outlook mail program, active directories allocating computer resources and the Front Page Web design program, he said. That hurts rivals such as Sun Microsystems, IBM and Novell Inc., he said.



Monti's difficulties



Some people familiar with the situation say Monti is well aware of the problems. But he has not tipped his hand on solutions and at this point has lots of diversions.



The Commission's competition directorate has lost three cases before the European Union's Court of First Instance. The merger prohibitions of Airtours-First Choice, Tetra Laval-Sidel and Schneider Electric-Legrand, recommended by Monti, were thrown out by the court. Monti has not had any prohibitions backed by the court.



And the Commission is still living in the wake of its decision to reject General Electric's proposed merger of Honeywell. U.S. and EU authorities have worked hard to heal the transatlantic rift which opened after that decision. GE appealed but no decision is expected for more than a year.



Microsoft is certain to appeal any adverse decision from the Commission. But Monti has one advantage in the Microsoft case over the troubled merger cases, where his staff was rushed for time because of a four-month limit to reach decisions. There is no time limit on cases like that of Microsoft, so there has been plenty of time -- nearly three years so far -- to get things right.



(C) Reuters Ltd.

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