MS ANTITRUST : Judge ponders effectiveness of MS remedies

The judge deciding whether Microsoft Corp. must comply with the European Commission’s remedies for the company’s antitrust violations questioned Friday whether the steps ordered by the Commission will effectively curb Microsoft’s power.

“Is it realistic that this remedy will have a real effect? Isn’t it a bit dramatic to impose a remedy where you don’t know the result?” Bo Vesterdorf, president of the Court of First Instance, asked in Friday afternoon’s hearing.

The Commission’s view is that preventing Microsoft from bundling its Windows Media Player with Windows will restore competition in the media player market and reverse Microsoft’s growing dominance in that sector. The Commission admitted it can’t be sure how many PC manufacturers will choose to ship Windows without the media player if given the option, but lawyer Per Hellstrom insisted that the demand is “reasonable” and will help consumers and vendors select a media player based on the merits of the competing products.

The judge, who will make his decision in the next two to four months on whether to suspend the demands, also seemed concerned that Microsoft was being asked to sell a product without many of the features customers had come to expect. Microsoft demonstrated at the hearing how a version of Windows without its media player would not be able to perform functions such as playing an audio CD, opening MP3 files and handling some tasks in Microsoft Office.

Vesterdorf seemed to toy with the idea of letting Microsoft restore some of the 186 files it was asked to delete from Windows to remove the Windows Media Player. That idea was strongly opposed by the Commission, whose representatives warned against diluting the remedy, which is intended to mitigate the risk of Microsoft achieving a near monopoly in the media player market.

Vesterdorf also investigated Microsoft’s claim that it will be severely damaged by the Commission’s order to share some interoperability information on its workgroup server software, the focus of Thursday’s hearing, in light of Microsoft’s admission that it was prepared to go even further on interoperability disclosures to settle the case. After the Commission revealed that during settlement negotiations Microsoft offered more disclosure than the Commission is now requesting, Microsoft General Counsel Brad Smith took the stand and tried to explain the contradiction. He said that Microsoft had been prepared to go further, but the disclosure still would have irreparably harmed the company.

Speaking after Friday’s session, Smith said the day had gone well for Microsoft. It was clear, he said, that “the remedy will impose billions of Euro of costs on European consumers and software developers,” which the Commission seemed to think was an “acceptable price to pay.”

Ed Black, chief executive of lobbying group the Computer and Communications Industry Association, which is backing the Commission in its case, said he felt good about the two-day hearing. Microsoft’s case lacked substance and fell short of the “irreparable harm” threshold the company needs to meet to have the Commission’s remedies stayed while it appeals the decision, he said. He also backed the proposed remedies: “A market for media players would now develop,” he predicted, if Microsoft is forced to stop bundling Windows Media Player.

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Jim Love, Chief Content Officer, IT World Canada

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