Microsoft To Unbundle Media Player by January - Page 2

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Redmond's Cause For Optimism

Microsoft's Smith said the court's ruling also provides it with "substantial cause" for optimism that it could eventually overturn the penalties.

For one, he said, the court noted Microsoft's argument that it does not currently market Media Player separately from Windows, which "is incompatible with a fundamental element" of its business policy.

"More particularly, Microsoft maintains that Article 6(a) of the Decision causes damage to the Windows operating system 'basic design concept.' In substance, Microsoft thus invokes an interference with its commercial freedom," the ruling said.

"In this context, it should be emphasised that implementation of the Decision would require Microsoft to market an operating system without certain media functionalities which in its view form an integral part of that operating system. The decision therefore interferes with Microsoft's commercial freedom."

"Furthermore, certain applications designed to function on the whole package consisting of Windows and Windows Media Player might not function satisfactorily in the Article 6 version, at least if that version should remain without a media player."

The ruling continued: "In the circumstances of the present case it must be accepted that the interference with Microsoft's commercial freedom, when considered as such and independently of its actual effects on the market, cannot be regarded as irreparable."

Moreover, the ruling does not preclude the possibility that Windows Media Player would be restored, and will also continue in practice always to be bought with Microsoft's operating system. Plus, it noted that Microsoft seriously doubts that Windows without Media Player would sell in "significant quantities."

In its March ruling, the European Commission fined Microsoft a record $613 million (497.2 million euro), after it found the company abused its "virtual monopoly" with its Windows operating system and broke European antitrust laws governing competition. It ordered Microsoft to strip its media player from the Windows operating system within 90 days, and to allow more access to its application programming interface (APIs) for software companies within 120 days. Microsoft has already paid the fine.

Robert Badal, a partner in the law firm of Heller Ehrman White & McAuliffe, said if the penalties had instead been suspended, by the time the appeal process ended, the EU's order to sever the media player from the operating system might be moot.

The European Court of First Instance is the judicial body that considers appeals of rulings by EU Commissions and other entities. Today's is the first of two related rulings. A panel of judges will hear arguments in Microsoft's appeal of the actual antitrust judgment, a process expected to take up to five years.

The hearing on Microsoft's request for a stay in the judgment was handled as a separate matter from the appeal.

In June, Microsoft appealed the commission ruling.

Since the EU launched its investigation into Microsoft's competitive practices in the first place, Microsoft has been settling long-running litigation brought against it by technology rivals.

In April, it announced it would pay Sun Microsystems $1.95 billion to settle a patent infringement suit brought by the network infrastructure and software vendor and signed a ten-year technology-sharing agreement. Sun was one of the companies that complained to the European Commission about Microsoft's practices in 2000, setting off the investigation that led to the ruling and fine.

In November, it also settled litigation with Novell and the Computer & Communications Industry Association (CCIA) involving antitrust charges. In return for $536 million from Microsoft, Novell said it would withdraw its intervention role in the European Commission's antitrust case with Microsoft.

In addition, Microsoft joined the CCIA, a trade group that helped spur the European Union Competition Commission's investigation into Microsoft's practices in the first place.

According to the agreement, the CCIA will drop its push to have the U.S. Supreme Court reverse the Department of Justice's antitrust settlement with Microsoft. It also will no longer participate as an intervener on behalf of the European Commission in Microsoft's appeal of the Commission's ruling.

RealNetworks , however, is suing Microsoft in the U.S., and using the EU's charges of abusing monopoly power as part of its argument.

Smith said the company would complete testing of an additional version of Windows without media player in January and expects European resellers to have a version available to ship by February.

Updates prior version to add more ruling quotes and clarify Smith's comments.