Microsoft Loses Big in European Court

BRUSSELS -- Microsoft suffered a stunning defeat Monday, when an EU court backed a European Commission ruling that the U.S. software giant abused its power to crush competitors.

The European Union's second-highest court dismissed the company's appeal on all substantive points of the 2004 anti-monopoly ruling.

The court said Microsoft, the world's largest software maker, was unjustified in tying new applications to its Windows operating system in a way that harmed consumer choice.

The verdict, which may be appealed only on points of law and not of fact, could force Microsoft to change its business practices.

It also gives EU Competition Commissioner Neelie Kroes a green light to pursue other anti-monopoly cases and complaints involving Microsoft, Intel, Qualcomm and Rambus and to draft new anti-monopoly guidelines that were delayed pending the ruling.

"Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct. The Commission will do its utmost to ensure that Microsoft complies swiftly," Kroes said in a statement.

The court upheld a record 497 million euro ($689.9 million) fine imposed on the company as part of the original decision.

More important, it endorsed Commission sanctions against Microsoft's bundling of software and refusal to give rival makers of office servers information to enable their products to work smoothly with Windows, used by 95 percent of computers.

It annulled only the EU regulator's imposition of a Microsoft-funded independent trustee to monitor compliance.

"The Court of First Instance essentially upholds the Commission's decision finding that Microsoft abused its dominant position," a court statement said.

"This decision establishes principles for the behavior of this company. Microsoft should now finally comply with the Commission decision on operability," said Thomas Vinje, a lawyer for the European Committee for Interoperable Systems.