Microsoft: EC Ruling Will Affect Companies Outside Software Industry

Microsoft outlined some of its objections to the European Commission's ruling and penalties in the antitrust case with a seven-page paper that attempts to argue the Commission's actions represent a broader threat to other companies and industries.

Microsoft's response comes after reviewing the Commission's 300-page decision, which was not immediately available to the company when the Commission announced its record $613 million fine in late March. Microsoft did immediately promise that it would appeal the ruling, in a process that Microsoft general counsel Brad Smith said could drag out for four or five years.

Microsoft, which has nearly $53 billion in assets, released the paper late Wednesday that details legal counterarguments to the rationale behind the Commission's behavioral remedies on Microsoft. The Commission ordered Microsoft to offer a version of Windows that does not include the Windows Media Player and to disclose competitive interfaces required to communicate with Windows.

While calling the Commission decision "carefully written," Microsoft's paper goes on to slam what it says are "novel legal standards." "This 300-page analysis obscures, however, a critically important fact -- the Commission is seeking to make new law that will have an adverse impact on intellectual property rights and the ability of dominant firms to innovate," the Microsoft paper states.

The company's rhetoric attempts to alarm market leaders outside the software industry whose market share is nowhere near the 90 percent or more that Microsoft enjoys in the desktop operating system space. "Given the Commission's tendency to define product markets narrowly and to hold that a firm is dominant if it has a market share as low as 30-40 percent, these rulings put at risk the economic incentives for a broad range of companies and industries," the company writes.

According to Microsoft the Commission's decision raises two questions:

  • "When does a firm with a dominant position have a legal duty to license its proprietary technology and intellectual property rights to its competitors so that they can incorporate that very same technology into their own directly competing products?"
  • "When is it unlawful for a dominant firm to incorporate new components or features that demonstrably improve its finished product?"

  • About the Author

    Scott Bekker is editor in chief of Redmond Channel Partner magazine.