EU Backs Off Microsoft Sanctions

The European Commission (search) has temporarily suspended an order requiring Microsoft (search) to sell a version of its Windows operating system without a media player software, just before the order would have taken effect, it announced on Sunday.

The suspension will give a European Union judge breathing space to sort out Microsoft's request for a long-term suspension of EU-imposed changes to its business practices, which the European Commission demanded along with a record 497 million euro ($602.8 million) fine when it found the software giant broke antitrust law.

Microsoft appealed the Commission decision to the Court of First Instance (search) in Luxembourg, the European Union's lower court, arguing that the Commission decision was wrong.

On Friday Microsoft asked for a suspension of the sanctions for as long the case was before European courts, which could be three years or more. All filings before the court are confidential and not available to the public.

The Commission said it was wrong to enforce the remedies while the court was deciding what to do about them, but believes they are "reasonable, balanced and necessary to restore competition in the marketplace."

There is "a strong public interest in favour of implementing them without waiting for the judgment on the substance of the case," the Commission said.

Had the Commission not acted, Court President Bo Vesterdorf could have issued a temporary suspension.

The Microsoft associate general counsel for Europe, Horacio Gutierrez, said his company would be hurt by the remedies as would "many other software development companies and Web site developers who have built products for the Windows platform."

The Commission ruled in March that Microsoft had violated the law by using its dominant Windows operating system (search) to compete unfairly against rivals.

The Commission gave Microsoft 90 days to separate Windows Media Player (search), which plays music and video over the Internet, from its Windows operating system. The deadline was Sunday.

Under the suspended sanction, it would have been up to computer makers to decide whether to ship Windows with Windows Media Player or with a rival product, such as RealNetworks' Real Player (search).

"Once Microsoft releases a degraded product without media functionality into the market you cannot pull the product back," Microsoft's Gutierrez said.

The Commission also gave Microsoft 120 days to license interconnection software to ease the way for rivals to hook up their servers to Windows as easily as Microsoft does.

Microsoft said it wanted to suspend the sanctions because once carried out they could not be undone.


Judge Vesterdorf must weigh three aspects of the case when he decides whether to suspend the sanctions. First, Microsoft must show that it has a reasonable case that can be argued.

Second, the company must argue that its request is urgent and that it will suffer irreparable harm.

"Once Microsoft releases code under this decision, those intellectual property rights are lost forever, even if the court grants our appeal," the company said.

And finally, it must show that the balance of interests involving itself and the general public favours the suspension.

Vesterdorf's ruling may be appealed to the European Court of Justice, the highest EU court.

Microsoft's critics contends its argument for seeking a suspension.

"All the risk in suspension is to consumers and competitors, not Microsoft," the Computer & Communications Industry Association (search) said when it made a filing with the court last week.

It said the suspension would give Microsoft time to tip the market in its favour while the case was being heard.

Gutierrez disagreed.

"Our position is that these remedies are not necessary today or in the future," he said.