Microsoft is ready to remove media player for EU

Microsoft will be ready to comply with the European Commission's demands for changes to its Windows operating systems if a European court rejects its request for the measures to be suspended, a spokesman for the company said Monday.

The European Commission ruled in March that Microsoft should offer a version of Windows without Windows Media Player (WMP) software, grant access to documentation for network server software, and pay a fine of Euro 497 million (US$610.4 million) because the company had abused its market dominance.

Microsoft has challenged the Commission's decision in the E.U.'s Court of First Instance, and has asked for the Commission's demands to be suspended pending the outcome of the appeal, which is expected to take between two and five years.

The court will hold hearings on Thursday and Friday this week at which the company, the Commission and more than 10 interested parties will present evidence. The judgment by the court on suspending the measures is expected in around two months' time.

"We will be prepared to comply with the court order whatever it is," said Microsoft's general counsel Brad Smith, speaking at a news conference in Brussels on Monday.

The company had "spent millions" so that it could meet the court's judgment, he added, suggesting that development work has already been done to offer a version of Windows in Europe without the WMP software.

Microsoft has protested in the past that unbundling elements of Windows would be difficult and could even damage its operating system. Smith's remarks represent the first time that Microsoft has appeared willing to make a significant change to Windows in the face of pressure from antitrust regulators.

One legal expert who has followed the case said unbundling WMP would be a victory for consumers and competitors. It would force Microsoft to compete based on the merits of its software, said Thomas Vinje, a partner with the Brussels law firm Clifford Chance LLP.

"For RealNetworks, Apple and other companies ... it would mean that they might have a chance of surviving in this market. Thus, for consumers, such a decision would mean that they might continue in the future to have a choice of media players," said Vinje, who represents Microsoft rivals, including the Computer and Communications Industry Association (CCIA), a lobbying group based in Washington, D.C.

Vinje said he believed the Commission would prevail in its case against the Redmond, Washington, software maker. He did not see the removal of WMP as an onerous task for Microsoft, however. "It's been obvious to any observer that it's easy to comply," he said.

Europe would be the only place where "Windows-lite" -- i.e. Windows without WMP -- would be sold, Microsoft said in a briefing note for reporters. The rest of the world would continue to use the full version of Windows, and it encouraged content developers to continue to encode music and other digital products in its Windows media format.

"Europe would be the main loser as the result of the Commission's decision," it said, characterizing the removal of WMP as a move that would harm users.

Even while making its concession, Microsoft rejected the Commission's main argument that Microsoft is using Windows' ubiquity to help it dominate the media player market. "The number of formats (for digital music) is not shrinking, it's growing dramatically," Smith said.

The average number of digital media formats on the 1,000 most popular Web sites had increased from 2.1 in the fourth quarter of 2001 to 2.8 in the second quarter of 2004, Smith said. He also cited the success of music download services like those of Apple and Sony Corp. as proof that the market was competitive.

"Apple and Sony are providing a single format, but it's not Microsoft's," he argued. Competition in the market has been increasing, although it has not been "rebounding to RealNetworks", he said in a swipe at the company that brought the original complaint against Microsoft to the Commission.

Smith also dismissed the Commission's argument for forcing Microsoft to share documentation on its network server software. "The Commission says Linux would disappear" if Microsoft did not grant access to its documentation, Smith claimed. "But Linux is alive and well and I don't know any person at Linux or any Linux programmers who share the Commission's view".

Smith also said that even if Microsoft wins the final case, it will be prepared to discuss with the Commission how to address its concerns about the state of the market.

"We are ready to restart negotiations with the Commission. We have always said people have issues that need to be addressed through face-to-face negotiations to tease out the technological nuances. We remain committed to that," Smith said.

He warned that if the court upheld the Commission's decision it would "slow innovation" in Europe, raise prices for consumers and privilege some special interests.

With additional reporting by Laura Rohde in London.

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