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Microsoft loses bid to suspend EU sanctions

First copies of Windows OS without Media Player to hit shelves by February

Microsoft has lost its bid to suspend sanctions imposed on its business practices by European regulators pending the outcome of an appeal.

The President of the Court of First Instance, the European Union’s second-highest court, ruled this morning that Microsoft must offer a version of its Windows operating system that does not include its Media Player software. It must also publish APIs (application programming interfaces) that should make it easier for competitors to make server products that work well with its Windows software.

The software maker has failed to prove that carrying out the sanctions imposed by the European Commission would cause “serious and irreparable harm” to its business, the court said.

The decision is seen by some as a blow to Microsoft, which had appealed against the Commission's decision issued in March. It means Microsoft will have to comply with the measures at once, pending the outcome of a longer-term challenge to the decision which is expected to take as long as five years.

A version of Windows without Windows Media Player will be available from PC makers in Europe from January and through other distribution channels such as retail stores in February, Microsoft general counsel Brad Smith said after the decision was issued.

Smith went on to say that Microsoft will also post a website immediately with information about how makers of server products can license the communications protocols it has been required to release.

While the court ruled against Microsoft’s request to suspend the sanctions, the company said it was encouraged by parts of the court's discussion of the merits of the case.

“While the court did not find immediate irreparable harm from the Commission’s proposed remedies, the court recognised that some of our arguments on the merits of the case are well-founded and may ultimately carry the day when the substantive issues are resolved in the full appeal,” Microsoft said in a statement.

The court concluded that any harm Microsoft may suffer from the sanctions could be repaired if it eventually wins its appeal, Smith said. For example, it could withdraw the version of Windows without Media Player from the market, he said.

Microsoft is allowed to appeal against CFI president Vesterdorf's decision, but success will be hard fought as he has taken steps to ward off an appeal by preparing a long and detailed judgment, according to a source close to the case.

The Commission wrapped up a long investigation into the software maker in March, ruling that it had abused its dominance in the PC operating systems market to gain advantage in related markets, such as that of digital media players, where its competitors include Apple and RealNetworks.

Along with the behavioural remedies it slapped Microsoft with a fine of €497 million (£322.8 million), which the court said the company has paid. The remedies were due to take effect at the end of June, but Microsoft filed a request for the sanctions to be suspended pending the outcome of its appeal.


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