The European Union (EU) has opened an antitrust case against Microsoft, stating that the software giant is abusing its market position in desktop operating system in a bid to control the server market as well. The action comes after complaints from Sun Microsystems tipped off the EU's executive arm, the European Commission, that "Microsoft breached EU antitrust rules by engaging in discriminatory licensing and by refusing to supply essential information on its Windows operating system." A spokesperson for the EU says that Microsoft has been officially notified with a list of objections, and the company now has two months to reply. After that, the EU will decide whether to charge the company with antitrust violations and impose fines. The governing body says that a decision by the end of the year is a possibility.
"We will not tolerate the extension of existing dominance into adjacent markets through the leveraging of market power by anticompetitive means," said EU Competition Commissioner Mario Monti. "All companies that want to do business in the European Union must play by its antitrust rules, and I'm determined to act for their rigorous enforcement." The EU's charges are somewhat different from those the company faces in the U.S.: The Europeans are attempting to prevent Microsoft from dominating the server market in the same way that they now dominate the desktop market. The American case focused on Microsoft's leveraging of the desktop market to gain easier entry into other markets, such as Web browsers.
According to the EU, if a corporation is found guilty of antitrust violations, that company can be fined up to 10 percent of its annual revenues. Fines to date, however, have never exceeded 1 percent. Microsoft landed in hot water with the EU when it denied Sun Microsystem's request for interface information in late 1998. The company wanted to ensure that its server software could interoperate with Windows NT 4.0 and all subsequent versions. A second case against Microsoft, involving complaints about middleware bundling in Windows 2000, is also under investigation in Europe. It's possible that the two cases could be merged in the future.
Ironically, Microsoft is in the process of trying to dismiss most of the class action lawsuits against it because of its guilty verdict in the U.S. antitrust trial. The company has filed a brief with the U.S. District Court in Baltimore, Maryland, asking that 37 of the 100+ cases against it--which allege that Microsoft overcharged consumers for Windows 98--be dismissed. Microsoft has already seen a number of the class action lawsuits against it get thrown out because of a 1977 precedent in which it was decided that a company cannot be sued for price gouging by someone that didn't buy the product directly from that company. "There is one principle of federal antitrust law that has long been crystal clear and uniformly applied: indirect purchasers--those who did not pay the alleged antitrust violator but instead paid another party in the chain of distribution--may not bring a claim for damages," Microsoft said in its filing. Because Windows is generally acquired with a new computer or sold through retail outlets, consumers are unable to sue Microsoft for overcharging them