The hammer descends on Microsoft!

David Lawsky

BRUSSELS: Microsoft failed to reach a deal with the European Commission, setting the stage for a landmark antitrust ruling next week that will brand the software giant an abusive monopolist.

It will be fined and ordered to offer a version of its Windows operating system without Windows Media Player to encourage computer makers to provide other audio-visual software. Its shares were down 1.8 percent at $24.68 in midday U.S. trade.

The decision comes after a decade of probes and legal battles, including several cases in which the Commission took action to prevent Microsoft from using its dominant position to crush smaller rivals.

This time the Commission wanted a binding promise from Microsoft to change the way it does business in Europe, putting an end to a pattern of bringing one case after another and getting new settlements each time.

"I'd just like to inform you that a settlement on the Microsoft case has not been possible," Competition Commissioner, Mario Monti said as he made a surprise appearance at the EU executive's daily news briefing.

Monti met Microsoft Chief Executive Steve Ballmer three days in a row, once for four hours.

"We were unable to agree on principles for new issues that could arise in the future," Ballmer said in a statement.

A major issue in the case had been Microsoft's efforts to damage rival makers of audio-visual software by allegedly tying its Windows Media Player to the Windows operating system.

Microsoft itself was willing to go further than a Commission plan requiring it to supply a second version of Windows stripped of built-in audio-visual software.

Microsoft was also willing to sell information to rival makers of server software so their products, which run on Linux and Unix operating systems, could work more easily with Windows.

© Reuters