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Last Updated: Wednesday, 22 December, 2004, 12:35 GMT
Q&A: Europe v Microsoft
Bill Gates
Microsoft is expected to appeal against the decision

A European court has turned down an appeal from Microsoft to suspend hard-hitting sanctions from the European Commission for the software giant's abuse of its market dominance.

BBC News looks at what the sanctions include and what could happen next.

What exactly did the European Commission hit Microsoft with back in March?

Firstly, there is the 497m-euro ($613m; 331m) fine, the largest Brussels has ever issued against a company in a competition case.

Such a fine would a heavy financial blow for most companies.

Yet for a firm such as Microsoft - which has some $53bn (27.7bn) in cash - this is peanuts.

What is of much more concern for Microsoft - and the major reason for its appeal to the European Court of First Instance - was the Commission's demand that the US software giant open up details of its operating systems to rival software producers.

What is the Commission ordering Microsoft to do?

Brussels has ordered Microsoft to start offering a version of its Windows operating system without its own Windows Media Player pre-installed.

This is one of the crux points of the Commission's ruling against Microsoft in March, when it found the US firm was abusing the market domination created by its Windows operating system.

By pre-installing its own brand media player, the Commission found Microsoft was giving itself a potential advantage in this market too.

The Commission wants this market opened up and is hoping that its proposals will make it easier for Microsoft's rivals to promote their players to users, who would also become more likely to buy them.

Of yet more concern for Microsoft, is the Commission's decision that it must share closely-guarded details of how its operating system works, so rivals can better develop their software to run as seamlessly as possible on Windows systems.

But why has Brussels been gunning for Microsoft?

The company would no doubt claim it is simply being penalised for being so successful.

But the Commission has argued that Microsoft has abused its market position - nine out of 10 personal computers around the world use its operating system - to squeeze out competitors.

In its battle with Microsoft, the Commission decided to concentrate on one area - the Windows Media Player, and the computer giant's decision to pre-install it on the rest of its operating software.

What are the chances of Microsoft now just paying the fine and going quietly?

Very slim indeed according to most analysts. The firm can instead now appeal to the European Court of Justice, the highest court in Europe.

This appears likely, as Microsoft's unsuccessful appeal to the European Court of First Instance was based around its view that having to comply with the sanctions now would cause it irreparable damage.

Microsoft instead wanted the sanctions suspended until the conclusion of its full appeal against the Commission's decision, a process that could take years.

So it looks as if Microsoft's appeal against having to comply immediately with the sanctions will continue alongside its main appeal against their validity in the first place.

So low long before this matter is finally closed?

It could run and run. The dispute had already lasted five years when the Commission lost patience with the negotiations and issued its ruling in March. The appeal could take another five years.

Microsoft has everything to gain from appealing against the latest ruling.

First, Microsoft is adamant it has not done anything wrong. Second, it is in Microsoft's interests to drag the matter out.

And third, the computer giant has always appealed over such matters in the past.




SEE ALSO:
Brussels blow to Microsoft upheld
22 Dec 04 |  Business
EU sets date for Microsoft appeal
25 Nov 04 |  Business
Urgent meeting in Microsoft case
24 Nov 04 |  Business


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