Hard Blows for Microsoft

Less than a year after Microsoft emerged more or less un-scathed from an antitrust lawsuit in the US, the global software giant is faced with the prospect of stiff penalties for abusing its monopoly position from a different quarter–the European Commission. Microsoft escaped with negligible penalties in the US, and the EC’s announcement has come as good news for the company’s rivals who, from the moment the final judgment was passed in the US, had been banking on a separate suit filed in the European Union for the imposition of a sterner verdict.

The four-year old EU probe has, for the first time, indicated that a harsh verdict could be in store as it holds Microsoft guilty of using its monopoly status to seize dominance in the low-end server and media player software market. The EC is looking into rivals’ allegations that denial of access to the Windows source code doesn’t allow their server software to achieve the same level of compatibility with the OS as it does the Microsoft software. An EC spokesperson has said the commission plans to order Microsoft to share parts of its OS code with its rivals.

The EC is also concerned with allegations that Microsoft used its monopoly position to bundle the media player and digital video editing software with its OS. The commission intends to strip such software bundled with Windows, or conversely, bundle similar software from rival companies along with Microsoft’s. Given the EC’s tough stance and indications, Microsoft could end up with a harsh financial penalty of up to 10% of its revenues last year (the company generated $32 billion in revenues for the year ended June 30, 2003).

The big question is whether the EC can achieve what the US judiciary could not–enforcing the remedies. The commission has given the company an opportunity to respond before a final judgment is awarded. An analyst from Gartner predicts that a settlement is still the likely outcome. 

RISHI SETH in New Delhi