An expected ruling, including a record fine, issued by the European Union (EU) on Wednesday came as a blow to US software giant Microsoft. The ruling, however, may not have as much impacts on Microsoft as expected by its competitors.  

After five years of investigation, the EU executive European Commission (EC) concluded that Microsoft broke EU's competition law and slapped a record fine of 497.2 million euros (about US$613 million).

The EC claimed that Microsoft has been leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players.

"Because the illegal behavior is still ongoing, Microsoft is ordered to disclose to competitors, within 120 days, the interfaces required for their products to be able to talk with the ubiquitous Windows System," the EC said in a statement.

Microsoft is also required to offer, within 90 days, a version of its Windows System without Windows Media Player to PC manufacturers, it added.

"Today's decision restores the conditions for fair competition in the markets concerned and establish clear principles for the future conduct of a company with such a strong dominant position," EU Competition Commissioner Mario Monti told a press conference.

"Dominant companies have a special responsibility to ensure that the way they do business doesn't prevent competition on the merits and does not harm consumers and innovation," he added. 

Analysts said that the fine is significantly large, but it would not likely to cause too much pain for the software giant, which holds 50 billion euros (US$60 billion) in cash.

The two additional "remedies," however, are likely to affect the company more.

These remedies would set important precedents about Microsoft's ability to integrate software into its operating systems, and what information it must disclose to competitors.

Those principles, for example, could affect what features Microsoft will be able to include in the next version of Windows, code-named Longhorn, which is expected to go on sale in 2006. Longhorn is a vital part of Microsoft's strategies for penetrating such markets such as home entertainment and Internet searching.

But this will not be the last chapter in this lengthy saga. Microsoft, who could never accept real restrictions on its ability to harvest its 95 percent market share in PC operating software, has announced that it would appeal to the EU's second-highest court, the Luxembourg-based Court of First Instance (CFI).

Microsoft argued that Media Player is an integrate part of Windows that meets consumers' demands for more functions. It also says that the information its competitors demand is its own intellectual property.

The software maker would also likely to ask for an emergency injunction allowing it to continue with business as usual until its possibilities for appeal are exhausted.

Analysts said that Microsoft has little to lose by appealing. Intellectual property law is a new field, so successful appeals are more likely than in well-established disciplines. In 2002, several important EC rulings on competition cases were overturned.

The Company also gains time. The CFI is not expected to make a decision for several years. Microsoft could also appeal to European Court of Justice in case the ruling by the CFI is not in its favor. Perhaps, the situation will resolve itself in time through technological change, or Microsoft can use the time to extend its software into other markets.

If Microsoft could convince the CFI for an injunction, the EU's ruling would have little short-term impact on software sales. But one thing is clear: Today's ruling would definitely lead to more antitrust actions against the Redmond-based software giant.

(Xinhua News Agency March 25, 2004)