With a new Republican president in power, America s competition authorities decided in 2002 not to pursue the case championed by the Clinton White House and instead negotiated a settlement with Microsoft. This consent decree , large parts of which will expire in November, amounted to little more than a slap on the wrist. It failed to administer any penalty and let Microsoft add new software elements to Windows so long as PC-makers were allowed to add rival products too. The provision regarding interoperability was also limited: the requirement to provide the necessary communication protocols applied only to the version of Windows that runs on individual PCs, and not the one running on the servers that dish up data on corporate networks.
The European Commission s initial ruling against Microsoft in 2004 can be seen as an attempt to address these shortcomings. The commission ordered Microsoft to sell a version of Windows without its media-player software, the bone of contention in Europe when it comes to bundling. It ruled that the firm had to provide information on how to interoperate with Windows servers. The commission also imposed a fine of $497m ,which has since grown to $777m because it determined that Microsoft was not fully complying with its decision.
The European court has now upheld these remedies. Even more importantly, it largely endorsed the commission s legal reasoning. It argued, for instance, that withholding information that is needed for PCs and servers to work together constitutes an abuse of a dominant position if it keeps others from developing rival software for which there is potential consumer demand. In such cases, the information cannot be refused even if it is protected by intellectual-property-rights, as Microsoft had argued.
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