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EC Gains on Microsoft's Loss

As the dust starts to settle from Microsoft's defeat in its appeal of the European Commission's (EC) decision in Monday's dramatic antitrust ruling, it appears that the EC gained more than the software behemoth lost -- to some at least.

Monday's ruling by the European Court of First Instance (CFI) upheld virtually all of the EC's 2004 decision against Microsoft for abuse of its dominant market position.

However, that doesn't necessarily have a big downside for the company, according to one expert in international antitrust law.

"The EC decision is something they were very keen on overturning … [but] I don't think it will have a dramatic impact on Microsoft," Tom McQuail, partner and antitrust specialist with law firm Howrey LLP in Brussels, told InternetNews.com. "I'm sure they'll pick themselves back up."

Monetizing bad luck

Microsoft, McQuail suggested, had already considered the consequences beforehand so it would be ready to move forward regardless of the decision.

One of the remedies demanded by the EC has had little effect. Per the EC's 2004 order, Microsoft offers a Windows Media Player-free edition of both Windows XP and Windows Vista. Though they have been available to PC makers and consumers in the European community in the meantime, very few people have shown any interest in them.

Additionally, while the court's ruling means that Microsoft has to make communications protocols -- which it had unsuccessfully argued contained trade secrets -- available to competitors, the CFI did uphold Microsoft's right to charge for their use. That, it turns out, has been a sore point between Microsoft and the EC over how much is reasonable.

After being informed that its initial royalty rates were too high, the company set them at 1 percent of the affected products' revenue but has solicited input from the EC as to whether those rates are fair.

"If that price is, in the commission's view, still too high, it will be very important for us to understand what price is low enough, so that we can conform to all of our obligations," said Microsoft general counsel Brad Smith during a press conference Monday afternoon in Brussels.

The one area where the CFI sided with Microsoft came when it ruled that the EC could not legally appoint an outside trustee to monitor the documentation-delivery process.

Microsoft was also ordered to pay the roughly $613 million in fines the EC had levied, as well as the EC's court costs. An appeal is still ongoing regarding an additional $357 million fine for providing protocol documentation slower than ordered.

Becoming less 'borg-like'

Since the 2004 ruling, Microsoft has made many moves to head off further litigation from all sides, including agreeing with U.S. antitrust regulators to enable users to choose Google's desktop search engine as the default in Vista. Most recently, Microsoft announced expanded interoperability collaborations with Sun, whose complaint about Microsoft's client and server protocol secrecy first spawned the EC's investigation of the software firm in 1998, and Novell.

Additionally, some observers point to Microsoft's recent loss in its attempt to gain fast-track approval for its Office Open XML formats as International Organization for Standardization (ISO) standards as a sign that the company's dominance is being reined in by market forces.

Smith added that there is currently only one outstanding complaint that has been lodged against the company, and that was filed by IBM. That complaint regards licensing protocols that permit Microsoft Exchange and SharePoint Server to communicate, he said.

The company declined to comment on whether it would appeal the CFI's decision. Such appeals can be made to the European Court of Justice, but only for questions of law.

Next page: The ruling heard 'round the world.