April 24, 2006 @ 5:12 pm
posted by xadmin

Luxemburg, 24 April 2006 (12:00 hours) – The Hearing of the European Court of First
Instance on Microsoft’s appeal of the European Commission’s March 2004 Decision opened
here this morning. ECIS is an Intervener in these proceedings and will give evidence in
support of the Commission’s Decision.

This morning, the Court heard evidence from Microsoft and others on its side concerning the
Commission’s finding that Microsoft has illegally tied its Windows Media Player to its
monopoly Windows PC client operating system. The Commission and ECIS will give
evidence on the same finding this afternoon.

STATEMENT BY SIMON AWDE
Chairman, ECIS

“The Commission’s media player ruling is about much more than just one software product.
Video streaming media players are the access point for users to reach most digital content
over the internet. By imposing its player and its format as the standard, Microsoft can
become the gatekeeper, which would allow it to dictate how and at what price digital media
content is created, delivered and played. “

“We have heard nothing new from Microsoft this morning.

“Complex technical explanations of why Windows Media Player isn’t really a separate product
from the Windows monopoly operating system didn’t convince this Court two years ago and
won’t convince it now, because Microsoft’s behaviour in the marketplace tells exactly the
opposite story.

“Windows Media Player is named separately, marketed separately, and updated separately
from Windows. It is the dominant video streaming applications product today only because in
1999 it was tied to the Windows monopoly. Consumers are obliged to accept Windows Media
Player on PCs they purchase and content providers have little choice but to write their content
to work with the ubiquitous technology. Microsoft imposed its media player on the market by
illegally tying it to the Windows monopoly, rather than allowing the market to choose.

“Microsoft likes to point to Apple’s iTunes as evidence that there is vibrant competition in the
media player market. But iTunes is not a fully-featured general purpose streaming media
player. It is the client side for the iTunes music store and iPod, providing jukebox functionality
for these products. As such, it does not compete with WMP. The arrival of iTunes hasn’t
made any difference to the ability of video streaming players to penetrate the market. The
fact that Apple moved away from competing with WMP head on, into the music service niche
does not contradict the Commission’s view that Microsoft’s tying forecloses new competition.
On the contrary, it confirms the Commission’s position.

“Differing business models are likewise beside the point for two reasons. First, no other
company, whatever its business model, has the monopoly power to impose its products
whatever their merits. Second, in the Microsoft business model the purpose of tying software
applications to the Windows monopoly is primarily to eliminate competition. There are no
efficiencies leading to user benefits from tying the media player to the operating system.

“Finally, it is disingenuous to contend that lack of demand for the version of Windows ordered
by the Commission without Windows Media Player shows that the market isn’t interested in
alternatives. If Microsoft had not tied Windows Media Player to the Windows monopoly in
1999 to impose it on the market, it is highly likely that consumer preferences would still be
spread over a number of competing media players. Competition was largely eliminated and
consumer choice as well.”

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