Microsoft Wraps Up Defense In EU Antitrust Case

"We've come to Brussels not only to discuss the issues but to work things out," Brad Smith, Microsoft's senior vice president for law and corporate affairs, told reporters after a day and a half of closed-door testimony before EU regulators.

After finishing its presentation at the hearings, Microsoft turned the floor over to its critics, who are pushing the EU to be tougher with Microsoft than the U.S. Justice Department was in settling its antitrust case.

Barred by EU rules from disclosing what was said inside, Ed Black, president of the Computer and Communications Industry Association trade group, hinted that Microsoft had taken some heavy criticism in Thursday's proceeding.

"I would guess at this moment Microsoft is probably not very happy that they asked for these hearings," he said.

id
unit-1659132512259
type
Sponsored post

The critics include Washington-based CCIA, the Free Software Foundation Europe of Essen, Germany, and Provo, Utah-based Novell, which just bought a major German distributor of the open-source Linux operating system.

On Friday, Sun Microsystems - which filed the original complaint against Microsoft in Brussels five years ago - and RealNetworks take the stand, followed by two Microsoft-friendly trade groups. Microsoft then gets time for a final statement.

While EU officials say they remain open to a deal, Microsoft has shown little enthusiasm for its conditions. The European Commission, charging that Microsoft is trying to elbow rivals out of the market for multimedia software by packaging its own Media Player into Windows, proposed in August that Microsoft offer a version of Windows without the Media Player or include rival players.

It also wants Microsoft to disclose more software code to help rivals compete against Windows products in the server market, and is proposing heavy fines as well.

Microsoft wants to defend its core strategy of keeping Windows on top by building in new features, as it did with Internet Explorer and Media Player.

It already is planning an Internet search engine in the next version of Windows. The company, in addition, has a long-term strategy to keep personal computers from being marginalized at home by turning them into an entertainment hub - and making its own Windows Media the industry standard for all digital media.

"Microsoft believes that if everybody's got the Windows Media Player on Windows anyway, that will make people favor that format," said Matt Rosoff, an analyst with Directions on Microsoft, an independent research firm. "Without that, the Windows Media format doesn't have any market advantage."

Going into the hearing, Microsoft said any settlement must preserve "the company's ability to innovate and to improve its products." It maintains that an order to rip out Media Player just for Europe would be expensive, impractical and hurt European consumers most.

Rivals such as Netscape and RealNetworks call such "bundling" unfair competition - a view upheld by U.S. courts in the Internet browser case. Microsoft later reached a settlement with the Bush administration in 2001 that allowed it to keep its Internet Explorer in Windows with some conditions.

Microsoft argues that that settlement - now being reviewed by a U.S. appellate court - should address Europe's concerns. But the European Commission says its market surveys found Microsoft's anticompetitive behavior continued. The EU is expected to issue its decision next spring if no settlement is reached.

Separately, EU antitrust officials are pursuing a complaint from rivals that the latest desktop operating system, Windows XP, is designed to help extend Microsoft's dominance into new markets such as instant messaging, e-mail and hand-held devices like mobile phones. That investigation is still in the fact-finding stage, with no decision whether to press charges.

Shares of Microsoft were down 29 cents to close at $25.69 on the Nasdaq Stock Market.

Copyright © 2003 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.