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FAQ: Impact of Microsoft's EU defeat explained

How Microsoft's landmark defeat affects you

As the long-awaited decision on Microsoft's appeal of the 2004 antitrust ruling in the European Union was handed down on Monday, headlines used phrases ranging from 'stinging' to 'stunning' to describe the American company's legal defeat.

But with the ruling weighing in at 200-plus pages, we need a 'just-the-FAQs' edition. What happened on Monday, and what does it mean? Some of the answers follow.

What did the EU court do Monday?

The Court of First Instance rejected Microsoft's appeal, and confirmed both of the behaviours the European Union's Competition Commission said were illegal. The first problem, the Commission said in its 2004 judgment, was bundling, or 'tying', Windows Media Player to the operating system. The second - and the issue that has caused virtually all the contention between regulators and Microsoft - is that Microsoft used the dominance of Windows on the desktop to jack up its share of the server software market. The Court said the Commission's moves were correct in both cases.

The Court also reaffirmed the $613m fine the Commission originally slapped on Microsoft, saying that "the Commission did not err in assessing the gravity and duration of the infringement and did not err in setting the amount of the fine".

Who won, who lost?

Although experts and analysts thought last week that it might take days to shake out an answer to those questions, it took just minutes. Microsoft's general counsel, Brad Smith, clearly saw it as a major loss by Microsoft. "The decision is a disappointing one for Microsoft," Smith said in a news conference held shortly after the Court rejected the appeal.

Neelie Kroes, the EU's chief antitrust regulator, saw it the same way. "The Court ruling shows that the Commission was right," she said. "Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct."

If you're keeping score at home, it's EU 1, Microsoft 0.

What does this mean for me, Average Windows User?

That's hard to pin down with certainty, but some things seem clearer now. What won't change are the remedies Microsoft's already applied in the EU. The company must continue to sell separate versions of Windows in the EU that have been stripped of Media Player, for example. And it must deliver the protocols necessary for rivals to write server software that works with Windows. Undoubtedly, Monday's ruling will put more pressure on Microsoft to agree to the Commission's demands for more information on the protocols, and to reduce the licensing fees for those protocols.

Down the road, however, changes may continue to be asked of Microsoft, and perhaps other technology companies as well.

Talk of a chilling effect on bundling started to circulate even before Monday's decision, and gathered steam after the fact. "We haven't heard the last of the legal challenges to Microsoft's bundling practices by any means," Herbert Hovenkamp, an expert on antitrust law at the University of Iowa College of Law, told the The New York Times.

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