SOFTWARE: MICROSOFT TO ARGUE ITS CASE FOR INTERIM SUSPENSION OF SANCTIONS.

Back in March, Microsoft was fined a record Euro 497 million by the European Commission for alleged abuses of competition rules (see issue 2855). It was also told that it must offer a version of its Windows operating system without its Media Player audiovisual software, and disclose more information to its competitors about how its software works.

Both remedies, argues Microsoft, will limit consumer choice and stifle future innovation. The Commission thinks otherwise. It says that Microsoft needs solid competitors to keep it in check, encourage it to keep innovating and improving its software, and to give consumers a real choice when it comes to deciding which Windows products to install.

The purpose of the hearing on September 30 is to consider whether sanctions imposed on Microsoft should be temporarily lifted until after the appeal is heard. The appeals process could take years, by which time, the Commission argues, imposing the sanctions on the company would be meaningless. However, Microsoft contends that some of the remedies put forward will not be reversible if, subsequently, it is found to be innocent of the charges. The President of the Court of First Instance is expected to take a decision on whether to suspend the sanctions within a matter of months.

European Commission's arguments.

Microsoft stands accused of deliberately squeezing out the competition by tying Media Player into Windows, and making it unnecessary for users of Windows to go elsewhere for their media playing software.

RealNetworks, the largest challenger to Media Player, has suffered as a result - with sales of RealPlayer, its media playing software, drastically falling since 1999, when Media Player was first bundled with Windows.

The Commission maintains that stripping Media Player out of Windows will not result in an operating system without media streaming capability, but that retailers will now have more choice over the software that they ship with their computers. They can choose to package Media Player with Windows, or choose other media playing software instead. Either way, consumers will continue to benefit from media playing functionality in Windows.

Protecting innovation in the software industry was another driving force behind the Commission's ruling. If Media Player is the only product on the market, then Microsoft will have little incentive to upgrade and improve it, and there will be no other companies offering innovations.

Thomas Vijne, a lawyer for...