We are not breaking EU laws, Microsoft insists

Microsoft defended its business practices on Wednesday during a three-day hearing in Brussels in front of European competition...

Microsoft has defended its business practices during a three-day hearing in Brussels in front of European competition regulators, in a final attempt to persuade them that it is not breaking the European Union's antitrust laws.


Some of the rivals present in the closed-door session believed Microsoft is fighting an uphill battle. In August, the European Commission said it believed Microsoft continues to abuse the dominance of Windows, even after settling with regulators in a similar case last year in the US.


On his way in to the meeting, Microsoft's top lawyer, Brad Smith, acknowledged the size of the challenge he faced. When asked by reporters how confident he was, he said, "Hope springs eternal."


The commission's case is built on two specific arguments. It believes that Microsoft is using Windows' near-monopoly to muscle out competitors in the market for audio and video playing software and computer server software designed for small networks of PCs.


The commission said in August that by bundling its Media Player into its Windows products, Microsoft had put rival audio/video players, such as RealNetworks' Real One Player and Apple Computer's QuickTime media players, at an unfair disadvantage.


By withholding crucial information about Windows code, the commission said Microsoft has prevented rival makers' low-end server software from being able to interoperate with Windows.


Microsoft spent roughly an equal amount of time addressing the two specific accusations, according to Thomas Vinje, a lawyer with the firm Morrison & Foerster, which is representing the Computer & Communications Industry Association (CCIA).


"[Microsoft] repeated the arguments they made in writing to the commission - that Media Player is a natural part of the Windows operating system and that it achieves efficiencies by bundling it into Windows," Vinje said.


Microsoft tried to broaden the definition of the server software market to include all servers, not just the small server segment that it dominates, he added. If this argument holds up, it will be harder for the commission to prove that Microsoft has expanded its dominance of PCs into the market for server software.


According to market research company IDC, Microsoft held a 55% market share of servers costing less than $25,000 each in the second quarter of this year in the European Union. Its share of the whole server market in the same quarter stood at just 24%.


Microsoft was unavailable to comment on its presentation, but according to Richard Doherty, an independent analyst with IT research firm, the Envisioneering Group, Microsoft's argument about the size of the server market is correct.


"They are right to broaden the definition of the market beyond the low end servers, because all servers compete against each other," Doherty said.


However, Vinje said this argument was "fanciful".


The European Commission made a short presentation of its case at the hearing, but most of the time was devoted to Microsoft's defence.


Meanwhile, sources close to the commission said that it has sent out letters requesting information about allegations that Microsoft is continuing to abuse its dominance with Windows XP, a version of the operating system not covered by the antitrust case.


Paul Meller writes for IDG News Service

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