'Marketplace' Report: Microsoft Loses Court Fight A European court is upholding a 2004 ruling saying Microsoft abused its dominant market position. Along with that, the software giant lost its appeal against a record fine imposed by the European Commission.
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'Marketplace' Report: Microsoft Loses Court Fight

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'Marketplace' Report: Microsoft Loses Court Fight

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'Marketplace' Report: Microsoft Loses Court Fight

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MADELEINE BRAND, host:

Back now with DAY TO DAY. I'm Madeleine Brand.

A big surprise today in the computer software industry. Europe's second highest court unanimously rejected Microsoft's appeal of a ruling that affected its Windows operating system. The ruling ordered Microsoft to open its operating system up to competitors.

Joining us now is John Dimsdale from MARKETPLACE.

And John, why is this such a big defeat for Microsoft?

JOHN DIMSDALE: Well, you know, Microsoft has been fighting antitrust cases around the world for more than a decade now. The company's many rivals say that Windows, which runs more than 90 percent of all computers, is a closed system that keeps other software from running as smoothly as Microsoft products do. Remember, this was the issue back in 1999 in this country, when the judge decided that Microsoft should be broken up. The company settled that with the Justice Department in most states, but the European courts kept the issue alive. And three years ago the lower court there said Microsoft is an unfair monopoly, must open its secrets to competitors. Microsoft appealed that ruling, obviously expecting to get better treatment, but all 13 judges of the appeals court upheld the lower court today.

BRAND: So what will Microsoft now have to do?

DIMSDALE: For one thing, it's going to have to sell a version of Windows that doesn't contain Windows Media Player, which is used for playing music and video. Competitors like Real Networks complain that the media player bundled free inside Windows keeps them out of the market. Microsoft is going to also have to reveal the software code that runs Office servers to give other companies a chance to write software that runs office products like word processors, spreadsheets and windows; that's something Microsoft has fought very strongly against.

And Joe Wilcox, who writes for a blog called Microsoft Watch, says today's court decision will potentially open up more challenges from Microsoft's many competitors.

JOE WILCOX (Microsoft Watch): So Google could come forward, complain about integrated search; someone else could come and complain about Web browsers; and Microsoft could in the future find itself unbundling a heck of a lot more than just the media player.

BRAND: John, I imagine Microsoft's reaction hasn't been good to this ruling.

DIMSDALE: Right. It can appeal to one higher level, although in the European system it cannot challenge the court's findings. It can only challenge the interpretations of the antitrust laws. The company's lawyer says Microsoft will comply with the ruling while it considers other options. There's also a fine of more than $600 million, which isn't much of a worry for a company sitting on hundreds of billions in cash. Microsoft competitors must be feeling pretty good about this ruling, but analysts warn them to be careful what they wish for. This establishes a strong antitrust precedent that could be used, for example, to go after Apple's dominance in music players, or Intel, which has 75 percent of the computer chip market.

BRAND: Thank you, John.

That's John Dimsdale of public radio's daily business show MARKETPLACE. It's produced by American Public Media.

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