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3/19/2004
02:23 PM
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Microsoft Vs. EU Heads For Round Two

EU antitrust chief Mario Monti will preside over a meeting on Monday to determine the penalty against Microsoft for breaking European antitrust law; the company is expected to appeal.

With Microsoft vowing to appeal the European Union's antitrust ruling, the big question is whether the fine and sanctions will remain in place or be held in abeyance while the case works its way through the European court system.

Mario Monti, the EU's antitrust chief, will preside over a meeting Monday to determine the size of the fine to be levied on the charges that Microsoft broke European antitrust law. Based on precedent, most antitrust experts expect a fine of a few hundred million dollars--a number that the cash-rich firm can well afford. With $32 billion in annual revenue, Microsoft has amassed a cash hoard of several billion dollars.

The fine is expected be announced on Wednesday, along with the sanctions. Antitrust law in Europe is still relatively new--only a few decades old--so precedents aren't numerous. The appeal procedure, which could take years, would likely begin at the Luxembourg-based Court of First Instance. Later, the European Court of Justice could get involved.

While the two sides narrowly missed reaching a settlement this week, Microsoft CEO Steve Ballmer still held out the possibility of a settlement later on. "We made every possible effort to settle the case," he said in a statement, "and I hope that perhaps we can still settle the case at a later stage."

An early test of the impact the antitrust case will have could play out Wednesday, when Microsoft chairman Bill Gates is scheduled to deliver a keynote speech at a Microsoft conference on mobile software in San Francisco. With word of the imminent unveiling of a new version of Windows Mobile 2003 Second Edition making the rounds at the CeBIT conference in Germany this week, there has been speculation that Gates will unveil the new software. The EU case examined complaints about Microsoft tying Windows to its Windows.CE.Net software.

In spite of possible draconian penalties looming against Microsoft, the firm and the EU have been talking as though the case thus far has been a love fest. In a statement, Microsoft noted that "Ballmer agreed with commissioner Mario Monti's assessment about the constructive nature of the discussions between the company and the Commission. 'These discussions were carried out in a cooperative spirit and with professionalism on both sides,' Ballmer said."

But on Wednesday, the gloves will come off. The points of contention are well-known: the EU and Microsoft's competitors want the company to open up its operating systems to make it easier for competitors to market software for multimedia, servers, and other applications. In announcing the collapse of settlement talks Thursday, Monti said the two sides had reached agreement on Microsoft's past actions, but the big bone of contention remained Microsoft's future actions.

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