Competitors see hope in EC’s Microsoft ruling

SAN JOSE: Microsoft Corp’s competitors see a glimmer of hope in the European Commission’s ruling on Wednesday to change the way that new features are bundled into Windows, but analysts caution that such a fundamental shift may be far off or never happen at all. 

The world’s largest software maker was told by European Union regulators to pay a 497 million euros (US$606mil) fine, decouple Windows Media Player from the Windows operating system and provide information on how its server software for networked computers works.  

RealNetworks Inc, which makes the digital media software at the heart of the EC’s ruling, applauded the commission's decision, with deputy general counsel Dave Stewart calling the decision “fundamentally significant because the commission has clearly ruled that Microsoft’s strategy of bundling Windows Media Player into its software is illegal”. 

Yet, the reaction among some of Microsoft’s competitors fell well short of jubilation. 

Microsoft faces hard changes to its flagship product.

Sun Microsystems Inc, a long-time Microsoft adversary in the market for servers, said it was not sure whether Wednesday’s ruling would help competition or its own ongoing antitrust case against Microsoft. 

“All of those are things that need to get resolved before we’re going to be able to say anything definitive about what we’re going to do based upon this momentary decision,” Sun vice-president of legal affairs Lee Patch said. 

Analysts pointed out that the US government’s antitrust case over Netscape ultimately resulted in a settlement allowing Microsoft to keep the Internet Explorer Web browser as part of Windows. Netscape now has a minimal presence in that market. 

Microsoft chief executive Steve Ballmer, who is leading the company's charge into new markets, said in a conference call that the EC’s decision not to settle with Microsoft was a “much riskier course of litigation” for Europe. 

“We believe we should have the ability to improve our products,” Ballmer told reporters. 

When settlement talks broke down last week, legal experts noted that Microsoft was essentially adopting the same strategy it did with the US Department of Justice, by ducking it out with authorities in courts and waiting for a more favourable political climate to reach a settlement. 

In the US capital, lawmakers were quick to come to Microsoft’s defence, saying they would protest the EC’s decision. 

“I now fear that the US and the EU are heading toward a new trade war – and that the commission’s ruling against Microsoft is the first shot,” Senate Majority Leader Bill Frist said. 

If the EC’s decision prevails in what is expected to be a lengthy court battle in European courts, that would create a precedent making it difficult for Microsoft to bundle other features into its operating system software products. 

“That’s what Microsoft is really worried about,” said Matt Rosoff, analyst at Directions on Microsoft, an independent research firm based in Kirkland, Washington. – Reuters

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