Microsoft seeks to overturn EU ruling

updated 4:19 p.m. ET April 24, 2006

LUXEMBOURG - The European Commission forced the world’s largest software maker to offer a product no one wanted and virtually no one bought, Microsoft Corp. told the EU’s second highest court Monday as it began trying to overturn a landmark antitrust ruling against it.

Microsoft lawyer Jean-Francois Bellis said in his opening statement that the Commission made “fundamental errors of fact and reasoning” in its decision two years ago that the company abused its dominant market position to muscle into media software.

The Commission’s order that Microsoft offer customers a version of its Windows desktop operating system without the Media Player — intended to give people a free choice of media software — has been a spectacular failure, he said.

(MSNBC is an NBC-Microsoft joint venture.)

No computer maker has shipped a PC or laptop with the media player-free Windows XP N version, which is available only in Europe. “Not a single one,” Bellis told the 13 judges. Some 90 percent of Windows sales come from being pre-installed on computers when they are sold.

XP N sales represent 0.005 percent of overall XP sales in Europe, Microsoft told the court, and many of the copies produced may remain unsold, it said.

French retailer FNAC, the single largest retailer to order XP N with 46 percent of the orders, has said that it sees no consumer demand for the product, Microsoft said.

But others argued that it is Microsoft’s continued power over the market that is keeping people from embracing XP N, not a lack of consumer interest.

Thomas Vinje, a lawyer for the European Committee for Interoperable Systems — a group representing some of Microsoft’s rivals that is backing the Commission — said the lack of sales was a clear sign that Microsoft had held the market in check.

“It’s a missile that comes back squarely into the heart of Microsoft,” he said, adding that in 1999 PC makers had a choice of bundling different media players but with Media Player tied to the Windows OS, it quickly became the first pick for new computers.

Commission lawyer Per Hellstrom said Microsoft’s arguments were irrelevant because consumers did not have real freedom of choice over the media software they are offered.

“Microsoft’s pleas must be ignored,” he told the court. “This is the world according to Microsoft where it decides what is best for consumers.”

He said the company effectively controls the market because seven out of 10 computers sold in Europe ship with Media Player. Developers see these figures and make content for the player, a situation that squeezes rivals even further, he said.

To counter earlier claims by Microsoft that Windows couldn’t function properly without Media Player, Hellstrom showed a trailer for “Harry Potter and the Prisoner of Azkaban” on a laptop running XP N and playing with Apple’s QuickTime player.

“Despite what you heard this morning, it seems to work like magic,” he said, as the courtroom watched Harry, Hagrid and Hermione on monitors.

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