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Leaked EU papers signal guilty verdict, vast fine for MS

Obstructive conduct as well - surely not?

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An escaped European Commission antitrust document makes it clear that Microsoft is in deep trouble with Europe's authorities. The document, leaked to the Wall Street Journal, charges that Microsoft's server software - specifically, Windows 2000 - has been deliberately designed to exclude rivals, and that the company has illegally bundled Windows Media Player in a bid to establish a monopoly in Internet music and video.

European Union competition commissioner Mario Monti moved swiftly today to mute the effect of the leak, describing talk of fines as "premature," but from what the WSJ says about the document, he's on a clear loser here. Obviously, the Commission hasn't yet formally decided what to do about Microsoft, but equally obviously it's pretty much decided what Microsoft has done.

The document appears to set down the preliminary findings of the Commission's investigation, and according to Monti these have been given to Microsoft, which must now reply. The company has, claims the document, illegally used its Windows monopoly in a bid to leverage itself into an equally dominant position in the business and internet server market. This is what Sun claimed in one of the complaints to the EU that sparked off the investigation, and it would appear that the Commission views Microsoft as guilty as charged.

The Commission's apparent view on Media Player is puzzling, however. As reported by the WSJ, the document charges that "Microsoft illegally sought to dominate music and video software for the Web," and that it "illegally bundled" Media Player with Windows. But the report does not cover XP, which is the most obvious target for such charges. A Microsoft bid based on XP to dominate this area may be successful in the future, but any such efforts the company has made previously have been less than stellar in their effect. So it's not clear whether the Commission intends to charge Microsoft with attempted but failed murder, or whether the document is simply signalling that XP will be rolled into the case.

Monti's claim that talk of fines is currently premature is more than a little humorous, given that the document itself apparently brings the subject up, saying that Microsoft's efforts to mislead the investigation could result in a higher fine. The Commission has the power to fine Microsoft up to 10 per cent of revenue, which would come to a couple of billion dollars, but if it reckons that the company is very guilty indeed (which does seem to be the case) then the fine would surely be the maximum allowable without any non-cooperation penalty being included.

The non-cooperation is however possibly the best bit of the leak. Aside from claiming obstruction, the Commission says that Microsoft produced no less than 34 letters allegedly from companies supporting its case. Says the WSJ: "In many instances, the letters had been written by Microsoft, or the companies weren't aware they were to be used as evidence in the case, the Commission said."

Now, where have we heard that one before? ®

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