http://www.latimes.com/business/la-fi-micro23dec23,0,2601817.story?coll=la-home-business

http://www.latimes.com/business/la-fi-micro23dec23,0,2601817.story?coll=la-home-business
Microsoft Loses Fight Against EU Sanctions
The software giant is ordered to sell a version of Windows in Europe without its media player.
By Joseph Menn
Times Staff Writer

December 23, 2004

A European judge Wednesday ordered Microsoft Corp. to sell a version of its flagship Windows operating system without a music and video player.

The ruling by Court of First Instance President Bo Vesterdorf marked the first time in a decade of antitrust litigation that the software giant would be forced to make significant changes to a product.

Vesterdorf rejected Microsoft's request to temporarily suspend the sanctions imposed in March by the European Commission, and the company promised to comply with his order next month. Microsoft said it would charge the same amount for the operating system with or without Windows Media Player.

As a result, manufacturers may start offering their European customers personal computers equipped with a media player from RealNetworks Inc. or Apple Computer Inc. instead of Microsoft's player.

RealNetworks has paid PC makers in the past to install its player, and it might be willing to pay more if Microsoft's player is excluded.

"We're going to do our best to make good on the opportunity," said RealNetworks Deputy General Counsel Dave Stewart. He declined to predict how popular any PCs with only RealNetworks' media player might become.

Apple and the biggest PC makers declined to comment.

Unless it fares better in the next step of its appeal of the European Commission sanctions, Microsoft might be forced to take other features out of future editions of the Windows operating system, which powers more than 90% of the world's PCs.

The European Commission, the administrative arm of the European Union, hopes the upshot will be more competition in the software market.

"We've been waiting for this day to know whether Microsoft would be obliged by laws to change its business practices in Europe, and now it will have to," said antitrust lawyer David Wood of Gibson, Dunn & Crutcher in Brussels. "The difficult question for Microsoft is to what extent."

Wednesday's ruling, issued in Luxembourg, could hamper Microsoft's efforts to woo the entertainment industry as it figures out how to deliver content in a digital age.

Until now, the company could guarantee movie studios, record labels and other content providers that anything they produced in Microsoft's format could be played on any Microsoft PC.

Without such a guarantee for a third of Microsoft's market, "there's at least a chance of competition on the merits," said University of Baltimore antitrust law professor Robert Lande.

The Court of First Instance president also rejected Microsoft's plea that he suspend the other penalty imposed by the European Commission, requiring the company to disclose some programming techniques to rivals. Microsoft now must reveal, for a fee, details about how its PC software communicates with its server software for controlling networks and about how those server computers talk to each other.

The disclosures are designed to give such rivals as Novell Inc., Sun Microsystems Inc. and providers of the free operating system Linux a better chance at catching up to Microsoft's 60% share of the European server market. Sun filed the complaint that triggered the European probe more than six years ago.

On both issues, Vesterdorf held that Microsoft failed to show that the harm it would suffer outweighed the urgency to put the measures in place. Microsoft could follow the terms of the interim ruling while appealing, but Vesterdorf's decision probably ends the debate about when the remedies will kick in.

A separate court panel will eventually weigh Microsoft's full appeal.

Microsoft executives Wednesday said the company wanted to negotiate a final settlement with the European Commission that would end the main appeal and remove the uncertainty hanging over the company.

Microsoft has already settled with the U.S. Justice Department and resolved almost every significant private lawsuit brought by rivals, with the exception of RealNetworks.

The company's dollars might not go as far in Europe. Microsoft lawyers had said previously that they would have the best chance of cutting a deal if Vesterdorf issued a split decision.

European Commission spokesman Jonathan Todd said the body hadn't made a decision on Microsoft's renewed offer to talk. It hadn't been receptive beforehand, he said, and "there is nothing in the wording of today's decision by the Court of First Instance president to make negotiations more likely."

Not everyone agreed because the judge determined that Microsoft had an arguable case on the merits on some points.

"There should be just enough to put some self-doubt in the minds of the commission," said Shearman & Sterling antitrust lawyer Christopher Bright in London. Besides, he said, a settlement would preserve the limited precedent established in the case so far.

"We all think of this case as being Microsoft against the commission," Bright said. "But it's to some extent about how the European Commission is going to deal with monopolies over the next decade or even two decades. If the commission loses, its platform is really going to fall away."

A complete Microsoft victory had been seen as unlikely, and the company's stock dipped just 10 cents Wednesday on Nasdaq to $26.97.

The most significant long-term questions are whether Microsoft will shy away from bundling more products into Windows and, if it doesn't, whether the European Commission will intervene again.

Microsoft's Smith said the company would have to keep the player out of some copies of the next major version of Windows, expected in two years, if the main appeal remained undecided.

Beyond that, he said, Microsoft doesn't plan to alter its ways.

"If the court had been dismissive of all of our arguments on the merits, that would have been one thing," Smith said. "But that's not what the court did. It included a number of statements that are encouraging."

I find it laughable that they do this. I still think it's silly how they want MS to remove stuff that comes 'free' (OK it's bundled as you are paying for the OS which it just happens to be a part of). Nobody is forcing folks to use it but it's there if they want it. People can use other products if they want to and if other products are better then they will get used.

I still think including something for free can be interpreted as anti-competitive is a strange thing to go to court over. If Bestbuy included a free CD player everytime you bought a CD would they be taken to court for it?

"Barring a successful appeal, Microsoft would have to keep its own video and music player out of some copies of the next major version of Windows, expected in two years."
Beyond that, a company representative said, Microsoft doesn't plan to alter its ways.

In other words, they will continue to be horses' asses for as long as possible in every other way that they've always been:

Microsoft's vicious corporate practices -- including monopolistic tendencies (various abuses that thwart competition);
The infamous 'identified software' clause, preventing open-source from being implemented;
Unauthorized borrowing of Apple's operating system in making Windows 95 and 98;
Churning out operating systems which are tantamount to beta versions, thus choosing to let frustrated customers be the guinea pigs to uncover troublesome flaws;
Various security holes that keep cropping up and indicate how the company has other priorities much higher than turning out a quality product that customers have a right to expect;
Outright lying about the bundling mechanisms of Internet Explorer and Media Player with their operating systems;

and the list goes on and on!

I wish one day some person or entity would gather up all their indiscretions and improprieties that can be reasonably documented, and pull these together into one gigantic litigation against them.
For once, that would force the BIG picture to be seen as it needs to be, nationally and internationally!

Because, as things stand now, not enough attention has been focused on the truth in its full scope.
(Many people, including the first poster to this article, probably are not aware of what all the company has really been doing for all these years.)

Tom is right; Micro$oft needs to be held accountable!

Why don't they make the one without media player CHEAPER than the other one.

Probably they wouldn't want to take a chance on some consumers choosing the cheaper OS version (the one without THEIR player) and learn to like a competitor's version that otherwise might not have been tried. Micro$oft thrives best when they can control as much of the software market as possible -- that's why they LOVE to do integrated bundling.
Actually, this is the same reason they dragged their feet for so long about claiming that their OS wouldn't work if IE were taken out and Netscape, for example, were allowed as default.
Lies.
They could have done it from the start, but didn't want to.

I wish the mainstream media would put the full court press against Microsoft's dirty deeds with the same vigor they persecute every pecadillo of conservative politicians.

The drug industry would be another prime target. They can't really tell the whole truth about the drug industry, because they depend so heavily on drug advertising money. I'd say at least half of the ads during nightly network news are for prescription or OTC drugs.

So why do they go easy on Microsoft? I do not know. Microsoft doesn't buy that much advertising, at least not on TV.

The problem isn't that Microsucks gives their player away for free. In reality they don't, you buy the OS and that is part of what you get when you pay the price. It just looks like it was for free because no price tag was put on the player. Had it been so you could have said, I don't want the player.

The problem is that Microsucks has a past history that has followed them around like a dog on a leash. At one time Netscape was a competing browser maker for computers. Because Microsucks added IE "for free" and it could not be taken out of the OS, Netscape never really got off the ground to a commercial market. Microsucks intergrated the IE browser even more tighter into the OS. It can not be taken out completely and the OS function as it should . Truely it can not be really called a browser in the truest sense of the word as it is more mulifunction. Without the IE you have no desktop, taskbar, or icons. This was done purposely so that the IE would remain and no competion could demand its removal. Microsucks could always show it to be harmful if removed and that their product would no longer function as intended.

What is wrong with that you ask? No other maker can intergrate with the windoze OS as tight for one. The code is hidden and some you can buy for an arm and a leg and yet other parts are a "trade secret". Trade secrets are guarded most jealously and the courts and legislators of the land allow this so that there won't be mass rip offs of a companies product that makes it. Because of the lack of data no other maker can intergrate as well as Microsucks into their product. In essence they have a monopoly that can't be broken apart without being made to. In the past folks that made compression programs, defragement programs, ulitily programs, browser programs, player programs, videos programs, and many other applications have found the door shut in their faces when they approached the market to show the value of it. If it truely had value, it wasn't long till Microsucks was either making one of their own or buying something that would be then intergrated into their own products. By guarrentying that it would be in their OS and would function in a user freindly fashion the potential market dissappeared over night for these products and the companies either suffered a set back in potential revenue or failed completely.

What isn't said is that because they didn't have the code to intergrate it tightly and then see it to market, many products worked not as well or functioned even better than the one in the OS as developers found work arounds for the problem of intergration.

The other part of the problem is that because Microsucks has been so successful with both marketing and with wholesale consuming of other potiental competitors you now have a product that is common in most of its features around the world. What is bad about this is that the same security holes exist in most computers. Virus writers must guess at the files you have on your computer in order for it to find something to attach to. They don't know, they guess. Were it that there were competing OS's out there with different code far less exploitation would occur. Writers write for maximum compatibily.

Has anyone forgotten the y2k scare? This is the potential that such commonality has.

oooh. Anyway Internet Explorer sucks.
Mozilla Firefox baby!
www.mozilla.org

"I wish the mainstream media would put the full court press against Microsoft's dirty deeds..."

Like MSNBC?

Homie don't think so.

Deadman "if Bestbuy included a free CD player everytime you bought a CD would they be taken to court for it?"

YES - They probably would if it was seen as an atttempt to run everyone else out of the CD business, which is the way it would most likely be seen

This is what M$ has been doing since day one, they aren't giving anything away for free. They know if its included with Windows, 90% of the sheep will use it.
R

Nyer "Why don't they make the one without media player CHEAPER than the other one."

Im surprised they don't charge more for removing it. Reminds me of the story my Grandfather told me. He ask the Gas Station attendant why unleaded gas was higher price than leaded gas. The attendant told him it was higher because they had to remove the lead, to which my Grandfather said, Why not just NOT add the lead in the first place
R

"Has anyone forgotten the y2k scare?"

Scare? Or scam?

An intentional, foreseen and ignored, 20-year-old "mistake" by Microsoft (Motto: No one will ever need more than 64k of RAM) that cost the business world billions.

[As he types on an 8-year-old Mac that laughed at Y2K.]

mozilla firefox is better than IE by far and is faster.

www.mozilla.org
go get it.

There are loopholes - MS must release come communications technology, but they will probably do so under a licence that prevents open-source implimentation.

Allow me the privilege of adding another good piece of information, also goldenpi's, from a different thread:

"Azurre - true, you can download other players. But they take time, effort and inclination. The vast majority of users will download MS's media files, double-click and a player conveniently loads - they just have no reason to bother finding an alternative.
More seriously from the purely legal perspective, this also gives MS formats another advantage. A content producer can produce a WM-format file with 7.1 codecs in the assurance that almost every user will have the capability to view it immediately. Were they to distribute in another format, the potential viewers would be forced to install additional software at least once - a player and/or codecs. If those viewers are also customers, very few content producers would want to risk losing potential sales to frustrated customers who are not willing to download and install new software.
Of course, this can be convenient for users, for the same reason - but it's still anticompetative. Besides, Microsoft media technology is no longer the highest quality available. It was once, argueably. But not now."

My commments:

And, also, the things that wet1 wrote earlier on this current thread (yesterday at 12:20 p.m.) really adds a lot of valuable insight to what some us (including myself) should find helpful in the overall perspective of Micro$oft's devious impact.
I wish some of this phrasing could ultimately find its way to dossiers of attorneys for potential plaintiffs in subsequent litigation that I hope will happen now that the ice has been broken, so to speak.

Like a rich, spoiled brat...the company keeps wanting to have things their own selfish way.
(And the execs viewpoint is likely, why not? No stateside court has bucked the bully with an adverse ruling in the last ten years.)
Tom Barger wrote that this sanction marks the first time in a decade that Microsoft is held accountable in a court of law!
Hopefully, a precedent IS being set. Many more issues need to be hung around their neck like albatrosses.

Autodidact wrote about wanting the mainstream media to put the full court press against Microsoft's dirty deeds . . .

I can't help but hope that such vigor might at least be mustered at the European level if not here in corporate America.

From another thread, here's some additional important input from goldenpi:

"So, they are is a little trouble for bundling WMP. But what about Windows Messenger? Outlook Express, which alone is responsible for the rise of the hated HTML email (carrier of spam and viruses, devourer of bandwidth)? ActiveX, loved by spyware writers?"

I'm glad to see this stuff brought out for us to review and remember. I just wish it all could be thrown up in view for the general public to look at, for once...especially in a legal setting!