LONDON It did not take long for EU competition commissioner Neelie Kroes to put the boot in. Minutes after the European Court of First Instance handed down its significant judgment against Microsoft, she fired a warning shot across the bow of other high-tech companies that may be thinking of ignoring its antitrust strictures.
"The court has upheld a landmark commission decision to give consumers more choice in software markets. That decision sets an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries," said Kroes.
So what started nine years ago as a routine inquiry has now led to what can be termed a watershed for EU competition law, and we are in unknown territory of how far the EC's remit stretches in this highly complex area.
The key point to the ruling Monday (Sept.17) is that, in its 248-page ruling, the Court upheld both the Commission's argument and its order for Microsoft to hand over information on server protocols to rivals. Microsoft had claimed these were protected by patents and the Commission was forcing it to give away valuable intellectual property at little or no cost.
The court confirmed "that the necessary degree of interoperability required by the Commission is well founded and that there is no inconsistency between that degree of interoperability and the remedy imposed by the Commission."
Both Microsoft's lawyers' and engineers' arguments all along had been about the ability of a creative high technology firm to innovate and protect its innovations through Intellectual Property rights. That has now been rudely waved aside by the appeals court.
Companies and regulators will now need to grapple in different terms with a fundamental question: exactly how should a corporation that enjoys a quasi monopoly behave towards its rivals. Does it have to ensure that its innovative technologies are inter-operable with competing products?
Specifically in the Microsoft case which could set case law in the area should a software company, however dominant, be left free to bundle new innovations and applications into its flagship product. More generally, where should the line be drawn between a group's right to protect its competitive advantage and a regulator's push to ensure free competition.
Today's ruling, a real first in competition law, reinforces the EC's competition unit as perhaps the world's toughest antitrust watchdog. It is bound to have huge repercussions, some of which may not become clear for a long time yet.
It will certainly have a huge impact on the way Microsoft conducts its business in Europe. The fine to be handed down for failing to comply with the original ruling, in addition to those already levied, is largely irrelevant.
It is as a precedent that this case will be remembered, and it may not be all good precedent. Who will feel the EC competition lawyers' ire next? Maybe Apple, whose iTunes music website defiantly only works with the company's own iPods?