Lawyers for Microsoft and the European Commission appeared this morning before the Court of First Instance in Luxembourg for the start of a five-day hearing in the software firm's appeal against a ruling that it broke EU competition laws.
The Commission ruled in March 2004 that Microsoft broke competition law by leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players. It fined Microsoft €497.2 million and ordered it to "untie" the Windows Media Player from the Windows operating system. It was also required to assist competitors in making their products interoperable with Windows. Microsoft has always maintained that it acted lawfully.
In a statement released today, Microsoft said the two fundamental questions in its appeal are whether companies can improve their products by developing new features that consumers want, and whether successful innovators must hand over their valuable technology and intellectual property to competitors.
"These questions are critical to the success of individual companies, and also to the economic vitality of any competitive market," said Microsoft.
It points to growing competition in the online media player market: the average number of media players used by consumers has risen to 2.6 in 2006, up from 2.1 in 2004. Major PC manufacturers also have increased the number of media players they pre-install on computers sold in Europe – from an average of 1.4 media players in 2004 to 3.2 media players per computer in 2006. It also points out that the rapid rise of Apple’s iTunes service and Macromedia’s Flash media player "demonstrate the vigorous competition in the media player market."
Regarding interoperability, Microsoft points out that most large corporations in Europe operate IT systems composed of both Microsoft and non-Microsoft products. "In fact, many major European companies and public administrations provided evidence that interoperability already exists between Windows server software and competitor products, and has for many years," it said.
Microsoft concluded: "We recognise that we have a clear legal duty to comply fully with the Commission’s 2004 Decision even while the merits of the case are on appeal, and we will do our utmost to fulfil this duty completely."
The final decision is expected to take several months.
