Harsh Reaction in U.S. to Microsoft EU Antitrust Ruling

Sept. 18, 2007
Government says innovation and competition might be compromised.

An EU court ruling upholding antitrust sanctions against Microsoft drew a harsh response from the U.S. government and interest groups, which said it may stifle the burgeoning technology sector. Thomas Barnett, head of the Justice Deparment's Antitrust Division, said the European Court of First Instance (CFI) in the case against the U.S. software giant may do more harm rather good for consumers.

The EU court upheld a record $690 million fine imposed by the European Commission in 2004, part of a landmark antitrust case. The tribunal confirmed the Commission's 2004 antitrust finding that Microsoft had used its ubiquitous Windows personal computer operating system to crush rivals in other linked markets, such as media players. The Commission ordered Microsoft to sell a version of Windows PC without a media player already bundled in and to share technical information with rivals needed to make products that could function with Windows.

"Rather than helping consumers, (the decision) may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition," Barnet said in a strong rebuke of the EU action. He said that in the U.S. "the antitrust laws are enforced to protect consumers by protecting competition, not competitors" and that barring "demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously."

Similar comments were made by technology and other interest groups. "This decision marks the start of a dark period for (tech) companies --- large or small -- with a high degree of uncertainty around the protection of their intellectual property," said Jonathan Zuck, president of the Association for Competitive Technology, an industry group of which Microsoft is a member. "The precedent will threaten the ability of any successful company to protect its innovations."

Citizens Against Government Waste and the Taxpayers' Alliance, two groups that lobby for limited government, said that the decision "will stifle innovation around the world." The two groups said the court "apparently believes that real software designers need to be replaced by bureaucrats, who will now be in the business of writing code for computer programs and forcing intellectual property to be given away without adequate compensation."

Dick Armey of the government watchdog group Freedomworks added, "At the end of the day, this was a case about rival companies bickering about market share, not a case of consumer harm. Some companies may appreciate the big stick provided by European regulators, but consumers will see little benefit, and the business climate for American companies in the global marketplace just got tougher."

The EU decision comes in sharp contrast to an antitrust case in the U.S., in which Microsoft emerged largely unscathed from a long period of litigation. The company successfully overturned on appeal a judge's ruling that would have broken up the world's biggest software firm. Yet Microsoft has had to pay some four billion dollars in damages to rivals and remains under court supervision.

Copyright Agence France-Presse, 2007

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