Sep 17, 2007

EU ruling deals setback to Microsoft

Source: ZDNet
Written by Dawn Kawamoto

A European court dealt a severe blow to Microsoft’s competitive ambitions in Europe Monday by siding with regulators in an antitrust case against the company.

In its ruling, the Luxembourg-based Court of First Instance upheld European Commission claims that Microsoft abused its dominant position in the operating system market. Microsoft’s allies and competitors have been closely following the case since the Commission imposed antitrust sanctions against the company in early 2004.

The court’s decision is expected to have far-reaching implications for consumers, computer makers, Microsoft competitors and, perhaps most pointedly, the Commission’s ability to regulate technology companies on antitrust matters, legal experts and industry observers say.

“The court ruling is…welcome for its confirmation of the Commission’s decision and its underlying policy, but nevertheless, it is bittersweet,” Neelie Kroes, the Commission’s Competition Commissioner, said during a press conference Monday. “Bittersweet because the court has confirmed the Commission’s view that consumers are suffering at the hands of Microsoft.”

Kroes added that should Microsoft comply with the Commission’s order, she expects to see a “significant drop” in Microsoft’s overwhelming market share.

And while she gave no estimate of how steep she expects that drop to be, Kroes noted that it would likely be more than a few percentage points as more competitors enter the market. Microsoft’s Windows operating system runs on about 95 percent of the world’s personal computers.

“A market share less than 95 percent is a way to measure the success (of the order),” she added. A spokesman for Kroes later clarified that a fall in market share would be a logical consequence of fairer competition.

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