This morning, Microsoft and the European Commission (EC) finally faced each other in the European Court of First Instance in Luxembourg for the start of Microsoft's European Union (EU) antitrust appeals process. In March 2004, the EC charged Microsoft with abusing its monopoly power in the OS market and harming competition.

"At issue are whether companies can improve their products by developing new features and whether a successful company must hand over its valuable intellectual property to competitors," a company statement issued before the start of the trial said. "There is healthy competition and interoperability in all the markets covered in this case and we will bring those facts to the court."

The EC fined Microsoft $612 million and ordered the company to ship versions of Windows XP that don't include Windows Media Player (WMP). Additionally, Microsoft was required to provide technical documentation to competitors in the server market. That requirement has been a point of contention for the software giant, which has thus far failed to comply, raising the possibility of daily fines.

Today, Microsoft told the court that the EC made "fundamental" errors in deciding that the company illegally tied WMP to Windows. "That theory is flawed at every step," Microsoft lawyer Jean-Francois Bellis said, pointing out the many benefits consumers have enjoyed from the inclusion of WMP in Windows. He added that competition in the media player market is still thriving, contrary to EC opinions about the effects that Microsoft's product bundling would have.

Microsoft also noted that the WMP-less versions of Windows required by the EC have been an utter failure in the marketplace. Windows without WMP has sold poorly at retail--selling just 1787 copies, or 0.005 percent of total XP sales in Europe for the year--and not a single PC maker has actually shipped the WMP-less version with their PCs. "Not a single one," Bellis added. "\[It's\] a product that nobody wants."

EC lawyers will respond later today. Both sides are presenting their cases in front of a panel of 13 judges, and if the sheer number of its lawyers, technical experts, and advisors is any indication, Microsoft is taking this trial very seriously. At issue is a future where Microsoft might not be able to ship the products it wants if it loses the case. Ramifications from the EU antitrust case could therefore affect Windows Vista, which Microsoft still hopes to complete this year.