Microsoft to fight EC ruling

Microsoft is to seek a suspension of the European Commission ruling that hit the company with a €497m (£331m) fine, pending a full appeal.

The Commission said that Microsoft broke the law "by leveraging its near-monopoly in the market for PC operating systems onto the markets for work group server and for media players".

The company must now appeal within 70 days to the European Court of First Instance in Luxembourg.

Brad Smith, general counsel and corporate secretary at Microsoft, said: "We will go forward to the European Court of First Instance for a stay or suspension of the decision today."

Microsoft's biggest concern is the Commission's requirement that the company produce a version of Windows without Windows Media Player within 120 days, and the requirement to reveal code to competitors within 90 days, added Smith.

Part of Microsoft's grounds for asking for a suspension is that these requirements involve the issue of licensing - both of the code and of the Windows variant.

"You cannot ask someone to put something out under licence and then pull it out if it wins on appeal," said Smith.

He warned that the case could drag on for four or five years.

Paula Barrett, partner at law firm Eversheds, suggested: "The case could take two or three years."

Smith added that Microsoft's offer last week to include three competitor media players, which was rejected by the Commission, would have been a better solution.

David Smith, research fellow at Gartner, agreed. "If you take it at face value, for the immediate issue at least, what Microsoft offered last week would have better addressed what consumers wanted than what the EC has done," he said.

Smith added that the impact would be limited, particularly as the Commission did not insist on a price difference between the two versions of Windows.

Other analysts have been equally unimpressed. Nigel Montgomery, research director at AMR Research, told vnunet.com: "Users have just got used to this sort of thing and it makes no difference in the long term."

Neil Ward-Dutton, principal analyst at Ovum, suggested that the ruling would have no effect on anything Microsoft might do on other types of devices, such as set-top boxes, smartphones and PDAs.

"Microsoft is two steps ahead of this ruling. It has already made big strides in ensuring the Windows Media format, and its associated server products and creation tools are widely adopted by content and service providers," he said in a statement.

"If [the Commission] really wanted to deal with the Windows Media issue, [it] should have focused on server APIs, codecs and protocols rather than concentrating on the desktop domain."

But analyst Forrester indicated that the ruling could affect Microsoft's plans for Longhorn, its next operating system.

"Longhorn may now have to come in two versions to appease the EC: one with all the Microsoft bells and whistles, and one bare-boned version for other vendors to dress up," said analyst Paul Jackson in a statement.