Microsoft EU Antitrust Case

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Case Details:

Case Code : BENV005
Case Length : 16 Pages
Period : 1998-2006
Pub Date : 2006
Teaching Note : Not Available
Organization : Microsoft
Industry : Software
Countries : US, European Countries

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Introduction Contd...

The outcome of the case was critical for Microsoft since it was planning to release its new O/S Vista in 2007. Moreover, the case had been a drag on the company's European operations as the company had been under constant pressure from the EC to comply with its regulations.

Commenting on this, Kim Caughey, equity analyst at Fort Pitt Capital Group said, "I would have to say that I don't know how much it really affects the day-to-day operations, but it is a big deal for the company. They need to prove they can get along in other economies than the United States."⁸

EC Issues 'Statement of Objections'

The clash between the EU and Microsoft began when, on February 09, 2000, just before the release of Windows 2000 O/S⁹, the EC's Commissioner for Competition, Mario Monti (Monti) announced that the launch of Windows 2000 O/S along with server software, could breach EU's antitrust rules (Refer Table I for list of O/S released by Microsoft).

The announcement was made in response to the complaint filed by Sun in December 1998, alleging that Microsoft had breached EU antitrust rules by not disclosing necessary information regarding its Windows O/S for interoperability¹⁰ and that the company followed a discriminatory licensing policy by giving the information to only selected competitors.

Sun's contention was that Microsoft's dominant position in Windows client O/S required it to reveal its interface information to competitors to allow them to manufacture server software (non-Microsoft) that facilitated interoperability with PCs using Windows O/S¹¹.

Microsoft refused to provide such information regarding Windows 95, 98, NT 4.0, and the latest Windows 2000, to Sun. This meant that people using Windows O/S could use only Windows server O/S for achieving complete interoperability. This affected the business of competing server O/S manufacturers like Sun...

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8] "Microsoft's EU Fight Seen as Vista Threat," ww.zdnet.com, April 20, 2006.

9] The Windows 2000 O/S was released on February 17, 2000.

10] Interoperability is the ability to exchange information between various computers and server in a network. It can be achieved only if other systems can communicate with each other and the server through interfaces. For competitors to develop server o/s which can communicate with the computers using Windows o/s, information regarding interface source code for Windows o/s (partially) should be known.

11] In 2000, Microsoft was the market leader in the PC operating systems with 95% global market share.