Citizens Against Government Waste (CAGW) recently criticized the European Court of First Instance (CFI) for rejecting Microsoft's petition to delay sanctions imposed by the European Commission (EC) until an appeal on the merits is addressed. In March, the EC issued a decision requiring Microsoft to hand over valuable intellectual property to its competitors, unbundle its software, and pay a $666 million fine. Although the CFI recognized that Microsoft may prevail on the merits, for now the company's compliance with the EC's pernicious remedies will have far-reaching consequences on prices and innovation in Europe and the U.S. One result of today's decision is that Microsoft will have to create two versions of Windows, one with Media Player and one without.
"Microsoft has already reached a fair agreement in U.S. courts that provides a good basis for the EC's ruling to be overturned," CAGW President Tom Schatz said. "By forcing Microsoft to comply immediately with sanctions that may be repealed, the CFI is skewering the global marketplace with unnecessary, burdensome regulations. Hardest hit will be small software developers, who will pay billions of dollars in new costs to design software for more than one version of Windows."
While Microsoft and other companies have been fighting illegal piracy of intellectual property around the world, the CFI's decision to let the EC's findings go forward and make Microsoft's source code available to competitors is piracy by litigation. This decision is contrary to legal precedent and is offensive to the U.S. Constitution's protection of intellectual property. It is another example of the EU trying to make up for its economic ineptitude and will open the door for other competitors who can't succeed in the marketplace to tie up the courts and waste tax dollars bringing lawsuits against successful companies.
"No judge in the U.S. or Europe should bar companies from integrating products with additional user-friendly features," Schatz continued. "Consumers who are not happy with Media Player can easily download a different a player from any number of competitors. These decisions are best left to the marketplace.
"The EC's decision forcing Microsoft to give up many of its rights to its intellectual property is a dangerous setback to global economic growth. Companies will have no motivation for designing new products if they have to share their information with competitors or face strict penalties from the EC. If this decision forces Microsoft and other American companies to alter their products depending on where they are sold in the world or based on the whims of unelected bureaucrats, international business transactions could be severely hampered.
"The most ridiculous aspect of today's decision is that it allows the penalties to go into effect while recognizing the core strengths of Microsoft's arguments. The effectiveness of the sanctions is highly questionable (who would want a Media Player-free version of Windows?). Even the EC agreed that the non-Media Player version of Windows would cause some applications to fail. Consumers like integration, and punishing companies that offer people what they want while complicating computer usage -- all in the name of consumers -- is senseless. This precedent stymies innovation and undercuts intellectual property rules for all successful companies."
