Microsoft Corp began a challenge yesterday before the EU's second highest court of the European Commission's landmark antitrust ruling against it, arguing that the future of innovation in the technology industry was at stake.
In its opening statement, Microsoft lawyer Jean-Francois Bellis said the commission made "serious errors" in its decision two years ago that the company abused its dominant market position.
The hearing, expected to take five days, will focus on Microsoft's behavior in the late 1990s, with EU regulators using evidence from the company's rivals.
At its core, the hearing is focusing on two issues. The first is Microsoft's bundling of Media Player as a core part of its operating system, the second is on the commission's order that Microsoft share information and code with competitors to help them make software that worked smoothly with Windows.
In 2004, the US company was fined a record 497 million euros (US$613 million) after the European Commission found that Microsoft had taken advantage of its position as the leading supplier of software for PC operating systems to elbow in on rivals for work group server operating systems and for media players.
The commission ordered Microsoft to share information and communications code with rivals and to market a version of Windows without the media player to give consumers a free choice of media software.
In opening arguments, Bellis claimed that stripping out Media Player from Windows XP left consumers without the ability to listen to more music or watch more video.
On the commission's order, Microsoft made available for purchase Windows XPN, which did not include the ubiquitous player. That, lawyers said, meant consumers could not listen to CDs or play music from providers like Yahoo or Napster.
Bellis said that no computer maker had shipped a PC or laptop with Windows XPN pre-installed.
"Not a single one," Bellis told Judge Bo Vesterdorf, adding that only 1,787 copies of the operating system had been ordered as of March 31.
Both the world's largest software company and its rivals argue that the right to innovate lies at the heart of the case. Microsoft says it must be allowed to enhance its programs and guard its intellectual property. Critics say the giant cannot be allowed to use its dominant position to strangle competitors.
The EU said last December that Microsoft has not done enough to help its rivals develop compatible software and threatened Microsoft with daily fines of up to 2 million euros, backdated to Dec. 15, unless it complied. It has not yet decided whether it will levy these extra fines.
Times may have changed, but Microsoft's behavior has not, the European Committee for Interoperable Systems (ECIS) asserted as it filed a new complaint with regulators in February, claiming that Microsoft was up to its old behavior on a wider scale.
ECIS lawyer Thomas Vinje said the latest version of Microsoft's desktop software, Vista -- due in stores early next year -- will try to squeeze out rivals by bundling security, search engine and office functions.
Vinje says Microsoft vs the European Commission has the potential to set the "rules of the road" for the software giant before it launches Vista.
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