EU Reaction: Microsoft Challenges, Rivals Cheer

Reaction to the European Commission’s antitrust decision to fine Microsoft $613 million (497.2 million euro) was swift this morning from Redmond and from its competitors.

Microsoft emphasized its attempts to hammer out a settlement in advance of
the ruling, and added that it would appeal the decision.

Meanwhile, the competitor perhaps most impacted by the decision — RealNetworks — characterized the ruling as one which would allow it to “compete on a more level playing field.” RealNetworks, which makes RealPlayer, has sued Microsoft in the United States charging that it used its Windows monopoly to limit choice in digital media players.

This morning, Microsoft reiterated points it made last week after settlement talks collapsed.

“We worked hard to reach an agreement that would address the European Commission’s concerns and still allow us to innovate and improve our products for consumers,” Microsoft CEO Steve Ballmer said in a statement. “We respect the Commission’s authority, but we believe that our settlement offer from last week would have offered far more
choices and benefits to consumers.”

Last week, Microsoft had similarly noted [in a statement] that it had offered “a number of proposals aimed at addressing the Commission’s concerns about interoperability and media player technology.”

It’s widely believed that Microsoft had offered to distribute competitors’ software on a CD-ROM. However, that was believed to have been rejected by the Commission as an ineffective remedy. (Ballmer’s comments didn’t specifically address the purported CD-ROM proposal.)

As was also the case last week, Balmer took pains to praise the professionalism of the Commission. “Throughout this process we have cooperated fully with the European Commission and demonstrated due respect for the process and its concerns,” Ballmer said today. “As this case moves forward, you can rest assured we will respect and comply fully with European law, we will continue to invest in new technology breakthroughs, and we will
continue to work to bring our innovations to our partners and customers.”

While Microsoft appeared circumspect in its statement, the company’s
software competitors were less restrained.

“This decision is fundamentally significant because the European Commission
has formally declared that Microsoft’s media player bundling strategy is
illegal and has established the guideposts for future bundling cases,” said
Bob Kimball, general counsel for RealPlayer makers RealNetworks.

“RealNetworks welcomes the opportunity to compete on a more level playing
field because when that is the case, consumers have the benefit of
innovation and products like our RealPlayer,” Kimball added.

Sun Microsystems , itself no stranger to legal battles with Microsoft, also weighed in. (Sun and Microsoft have tussled over the inclusion
of support for Java in Windows.)

“Sun applauds the European Commission’s decision in the Microsoft case,” Sun said in a statement. “This decision is an important precedent for defining the principles of open competition not just for today, but for the future of a vibrant and vital worldwide IT

Though much of the analysis of EC decision has revolved around media-player
bundling, Sun’s statement sought to raise possible implications for Sun’s server software business.

“The Commission found that Microsoft has abused its dominant position in desktop operating systems to create an unlawful advantage for itself in the work group server market,” Sun’s statement said. “By requiring Microsoft to make disclosures that will allow
other servers to comparably interoperate with Microsoft desktops and servers, the Commission’s decision seeks to create a level playing field in the work group server market place . . . This is enormously significant for
consumers and for the industry.”

Also commenting this morning was Linux software vendor Red Hat. “Only time
will tell whether the Commission’s actions will have the desired effect,”
said Red Hat general counsel Mark Webbink in a statement. “Today’s
announcement reflects the recognition that consumer choice must be

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