Microsoft fails in court bid to suspend EU ruling

Wednesday, December 22nd 2004, 8:37 am

By: News On 6

BRUSSELS, Belgium (AP) _ A European Union court ruled Wednesday that Microsoft Corp. will have to abide immediately by an EU ruling that forces the software giant to change its commercial practices before the appeals procedure runs its full course.

The ruling of the Luxembourg-based European Court of First Instance has huge implications for the company, since it forces Microsoft to divulge some trade secrets and produce a version of Windows without its digital Media Player.

``After examining the circumstances of the case, the President finds that Microsoft has not shown that it might suffer serious and irreparable damage as a result of implementation of the contested decision,'' a court statement said.

``Microsoft's application for interim measures is therefore dismissed in its entirety,'' the court said.

Microsoft said the ruling still held encouraging comments and hoped it would help reopen settlement talks with the European Commission. ``There is ample room for us to continue to press forward with cause for optimism,'' said Microsoft counsel Brad Smith.

``While the court did not find immediate irreparable harm from the Commission's proposed remedies, the court recognized that some of our arguments on the merits of the case are well-founded and may ultimately carry the day when the substantive issues are resolved in the full appeal,'' the company said in a statement.

Microsoft said it would look closely at the order before deciding on its next step but will comply fully with the court order when it comes into force.

The full appeals process could take up to five years.

Though Microsoft reiterated its desire for settlement discussions, EU officials have said a court ruling in their favor would make it unlikely that the bloc's antitrust regulators would reopen talks.

The two sides were involved in settlement talks before EU antitrust regulators fined Microsoft a record 497 million euros ($666 million) and told the company to reveal some of its trade secrets to competitors and produce a Windows platform without Media Player.

Judge Bo Vesterdorf at the European court has been assessing the case since the final hearings in early October.

Both sides can appeal his decision, but Microsoft had indicated it is unlikely to do so unless it includes startling arguments against the software company.

The EU claimed Microsoft abusively wielded its Windows software monopoly and locked competitors out of the market.

Analysts predicted the financial impact on the company would not be huge. Microsoft has already counted the fine against its quarterly earnings, said Matt Rosoff, an analyst with Directions on Microsoft.

Rosoff also predicted the company wouldn't suffer much in the near term if it's forced to release a version of Windows without Media Player, because it's already prepared a version of the operating system without it.

Even if the court makes Microsoft put ``Windows lite'' on the market, Rosoff said he can't imagine many manufacturers would want it and consumers are not crying out for it either, he said. ``I don't see a lot of consumer demand for a PC without Media Player,'' he said.

Rosoff said the biggest threat was that the ruling, compelling Microsoft to strip something out of its operating system, would set a legal precedent for similar lawsuits.

Mark Ostrau, an analyst with Fenwick and West, also said that the ruling would hamper Microsoft's ability to bundle as much software into its operating systems as it would like.

``The real key to Microsoft's success is its ability to bundle. So not being able to bundle, or having that risk every time they want to bundle, that really does cramp their style.''