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Microsoft's Momentary Reprieve


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By Robert MacMillan Staff Writer
Monday, June 28, 2004; 10:05 AM

Microsoft attorneys will have more than enough time for coffee and danish now that European Union regulators have suspended their decision to require the software giant to make big changes in its Windows operating system.

The freeze, Dow Jones Newswires reported, was no surprise; it will give Bo Vesterdorf, the Danish president of the EU Court of First Instance, time to decide whether tough EU antitrust penalties handed down against Microsoft earlier this year should be suspended.
Dow Jones Newswires via The Wall Street Journal: EU Stays Orders Against Microsoft Pending a Ruling (Subscription Required)

According to The New York Times: "[The] commission said Sunday that it was 'not appropriate' to enforce the deadline before the appeals court had decided whether to suspend it for the length of the appeal, which could take several years. That decision will probably be made in September, and could itself be appealed to the highest court, the European Court of Justice."
The New York Times: Europeans Delay Enforcement of Order Against Microsoft (Registration required)

The Washington Post said the substance of Microsoft's appeal remains unknown because "none of the court filings in Europe are made public." The appeal was filed Friday, and the "decision announced yesterday puts the penalties on temporary hold until the court can decide whether to suspend the sanctions for the duration of the appeals. Had the regulators not acted, those sanctions would have taken effect today."
The Washington Post: EU Agrees To Stay Microsoft Penalties (Registration required)

More from the Times: "Despite appearing to give ground, at least in the short term, the commission affirmed its arguments leading to the legal remedies, saying that they were 'reasonable, balanced and necessary to restore competition in the marketplace.'" The Financial Times noted that while "the Commission refused to comment on the specifics of the case, its officials have long argued that the decision against Microsoft is based on solid and extensive precedent, and does not break new ground. In considering Microsoft's request, the court will have to decide whether the company has made a reasonable prima facie case in its appeal, whether it would suffer irreparable harm if the measures were to take effect and whether "the balance of interests" favoured suspension."
Microsoft in Move to Suspend Ruling

According to The New York Times, Microsoft said on Sunday that the changes ordered would hurt not just it, but also 'many other software development companies and Web site developers who have built products" for Windows. A little more background on Microsoft's objections to the EU penalties, courtesy of The Washington Post: "Microsoft argues that removing its media player from Windows will degrade the operating system, and that there is significant competition from other media players, including Apple Computer Corp.'s iTunes. Microsoft also is accused of trying to squeeze out rivals in the market for server systems, which power computer networks, by making it harder for competing software to work well with Windows. Microsoft denies these charges as well."

In a quote picked up by London's Guardian, Microsoft's top lawyer in Europe, Horacio Gutierrez, stressed why the company is gung-ho to suspend the EU's unbundling order: "Once Microsoft releases a degraded product without media functionality into the market you cannot pull the product back."
Microsoft's Reprieve From Sanctions

"It's definitely a relief for Microsoft," Joe Wilcox, an analyst with Jupiter Research, told the New York Post. "Only the company can answer how much preparation was done to make a version available without the player."
New York Post: M'soft Reprieve

Microsoft Miscellany: The Money Pit

Microsoft is starting its new fiscal year with a resounding "ouch," the Seattle Times reported today. The company's executives are on the record saying Microsoft will not increase expenses and that yearly sales will grow less than 10 percent for the first time. So now the company "is taking out its budget scissors, looking to save $1 billion in an across-the-company drive to cut costs. It is cutting spending on travel and entertainment, and reducing some worker benefits, such as the discount at which employees can buy stock. It has eliminated some positions and is closely analyzing its marketing and sales expenses. Even catering costs have not escaped scrutiny. And in an effort to boost sales, it is offering a number of rebates and discounts on its products."

It's more than business; there's a lifestyle on the block as well. "Microsoft used to be a penny-pinching company. Chairman Bill Gates flew coach for years after making his first millions. But in more recent times, Lenny Kravitz performs at product launches and the Xbox team parties with Paris Hilton in a rented house in the Hollywood Hills. Many workers get free memberships to a posh Eastside gym, and employee meetings are at Safeco Field, where it was so cold last year that blankets were distributed." Somehow it's hard to feel sorry for a company with more than $40 billion in cash in the bank...
The Seattle Times: Microsoft Clamps Down

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