Microsoft battle

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The European Commission is still fighting yesterday’s battle. Whatever the Court of First Instance rules this Monday on the Commission’s nearly decade-long struggle against Microsoft, it will be too late to influence one key issue: the contest for dominance of the media player market. Microsoft has cemented its position and it settled disputes with rival RealNetworks for $761m in 2005.

But the stakes are still huge. The ramifications of the court’s decision go far beyond Microsoft’s bundling of Media Player into Windows or the interoperability required for its server products. The ruling could profoundly shape European competition policy towards the technology sector.

If the Commission loses, it will be a body blow. Microsoft is the biggest case the regulator has taken on in terms of time and resources. Failure would surely dent its appetite to be so aggressive in the future. It would also leave it without clear precedents on interoperability and bundling to use in the future against Microsoft – or if it one day chooses to pick a fight with, say, Apple over its iTunes/iPod digital music system or Google over additions to its powerful internet search platform.

If the Commission wins, however, it would probably pursue cases with renewed vigour. Armed with new precedents, and the experience gleaned from its bruising encounter with Microsoft, future interventions against the software giant or others might take effect faster. Also, it could embolden other regulators around the world to take early action in fast-moving technology markets.

The challenge will be defining “victory” in this case. A possible outcome is that one side wins on bundling and the other on interoperability. Another is that the headlines tell one story but the guts of the judgment another.

Predicting what the court will say is a mug’s game. But if there is a clear judgment, either US corporate titans such as Microsoft, Apple, Intel, and Google might need to get busy beefing up their transatlantic legal teams or Europe’s role as regulator-in-chief of the technology sector could be in tatters.

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