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Original URL: http://www.theregister.co.uk/2007/09/18/microsoft_lost_appeal_impact/

What does Microsoft's European defeat mean?

By John Oates
Published Tuesday 18th September 2007 08:06 GMT

Microsoft today lost the majority of its appeal against the European Commission anti-trust decision. Microsoft will have to open up access to its server protocols, continue selling a version of its Windows operating system without Media Player, and pay a fine of at least €497m.

But Microsoft did have the imposition of monitoring trustee removed.

Guy Lougher, national head of EU and competition group at Pinsent Masons, told The Reg: "It's not necessarily the end of the story - Microsoft still has two months in which to appeal. There is likely room on points of law for an appeal against either the bundling or the interoperability issues. They will need to pore over the lengthy judgement carefully but there's likely to be room for a challenge if they choose to take it."

Lougher said if the judgement stands it will create opportunities for smaller businesses to challenge the interoperability restrictions of larger companies, as well as launching possible challenges to companies selling bundled packages of applications.

As for the impact on the Directorate General for Competition, Lougher said: "Since the original decision the commission has been effectively waiting for the court's decision. It has suffered several reverses at the hands of the court so this is an opportunity for the commission to be more active and aggressive. It is certainly a filip for morale.

"The sums involved would pay for a lot of expenses. Microsoft may decide it has little to lose by appealing. If it doesn't appeal this decision it may well face tougher fights in the future."

Michael Reynolds, a partner at Allen & Overy's international anti-trust group in Brussels, said: "This is important for the IT industry because companies negotiating with Microsoft who feel they are being treated abusively will have this decision in mind." Reynolds led the team representing Sun Microsystems which made the original complaint against Microsoft.

Reynolds said the verdict will give the commission renewed confidence. He said: "The commission decided not to settle this case. That was a very important decision and it was a bit of a gamble. Having gone down that road it is now in a very strong position, not just for Microsoft, but for dealing with other cases too. There are other investigations on the books and others like Google and IBM."

Asked whether Microsoft is likely to appeal, Reynolds said: "I think it might be difficult. The court has reaffirmed existing law rather than made big leaps forward."

For a US perspective we spoke to Carole Handler, vice chair of the IP Litigation Practice at Foley & Lardner. She said: "It's fascinating from a US perspective because the EU takes a much more proactive view of anti-trust regulation. The court has upheld a requirement to hand over intellectual property. It suggests that that EU will take a tougher line on Rambus and Intel."

Handler also said the decision could have an impact on strengthening US regulation, as could the upcoming US election. She said for multinational companies dealing with many different jurisdictions a situation could develop where rather than operate under many different sets of rules, companies instead choose the most rigorous set of rules in order that they are in fact compliant with everyone's regulations. ®

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