By IPS Correspondents
BRUSSELS, Sep 21 2007 (IPS)

Microsoft will still wield enormous power in the global computer industry despite this week&#39s ruling by a European court that the Seattle-based corporation has abused its monopoly.

In 2004, the European Commission imposed a fine of 497 million euros (613 million dollars) on Microsoft because it said the company was seeking to rig the international computer market in its favour. That decision – leading to the biggest fine ever stipulated by the EU&#39s executive in a competition case – was upheld by the European Court of Justice Sep. 17.

The crux of the issue is that Microsoft was &#39bundling&#39 its flagship Windows – an operating system used in 95 percent of personal computers – with the company&#39s MediaPlayer.

Mario Monti, then European commissioner for competition, objected to Microsoft exploiting its Windows monopoly to give it unfair advantage in the market for technology used to play video and music on the Internet.

Some of Microsoft&#39s critics were ecstatic over this week&#39s ruling, but others argue that it will not necessarily be easier now to use software on operating systems made by other firms.

"The general impression is that Microsoft has lost," Benjamin Henrion from the Brussels-based Foundation for a Free Information Infrastructure told IPS. "It has lost some money. But it hasn&#39t lost the war."

Henrion says the next question of concern will be the conditions under which Microsoft&#39s rivals will be able to have access to information needed to make their software compatible with other operating systems. There is still a risk, he says, that a deal could be worked out under which Microsoft will be able to apply stringent patents to the &#39protocols&#39 it uses.

In technology circles, the term &#39protocol&#39 covers the formats and processes covering the transfer of data.

"The Commission would have been better just taking the documents on interoperability and publishing them on the website, rather than imposing a fine," he said, referring to how Monti had ordered the firm to share details on its operating systems with rivals.

The Samba Team is one firm with a close interest in how the battle between Microsoft and the EU executive unfurls. It produces software which is designed to ensure compatibility between Windows and the operating system Linux.

Volker Lendecke from the Samba Team says Microsoft data must now be available to manufacturers of &#39free&#39 software. The latter are opposed to placing patents on software. They believe that applying stringent intellectual property rights to the formula on which software is based means that only large firms will be able to develop software.

"Now that the court has decided, we will be watching closely what the exact licensing terms for the interoperability information are," Lendecke said. "It will be very important to make sure the information is usable in free software. Otherwise, the great success the Commission has achieved here will be severely harmed."

Georg Greve from the Free Software Foundation Europe gave a more upbeat assessment of the court ruling. "Microsoft can consider itself above the law no longer," he said. "This decision has set a very important precedent for the future. Secret manipulation of open formats and protocols has clearly been marked as unacceptable conduct."

Microsoft&#39s lawyer Brad Smith has noted how the ruling has given the European Commission "quite broad power and discretion." He also said that Microsoft has no desire to embroil itself in a constant slanging match with the Brussels bureaucracy.

Still, the company is unlikely to suffer any colossal setbacks.

At the time the fine was imposed on it, Microsoft held 53 billion dollars in cash. Its chief executive Bill Gates remains one of the world&#39s richest men, and has taken steps in the past year to consolidate his position at the forefront of global capitalism by investing in other activities, such as luxury hotels.

Nor have there been any signs that Microsoft is repenting for the kind of misdeeds that regulators say they found.

However, the court ruling has strained transatlantic relations by highlighting U.S. unease over the European Commission flexing its muscle in regulating the global marketplace.

Thomas Barnett, head of the anti-trust division in the U.S. Department of Justice said that rather than helping consumers, the ruling "may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition."

Neelie Kroes, European commissioner for competition, did not conceal her anger at the U.S. reaction. "It is totally unacceptable that a representative of the U.S. administration criticised an independent court of law outside its jurisdiction," she said. "The European Commission does not pass judgment on rulings by U.S. courts, and we expect the same degree of respect."

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