Christmas comes early in Luxembourg

Judge Bo Vesterdorf, president of the European Court of First Instance in Luxembourg, upheld the ruling of the European Commission on Microsoft’s bundling of media players with Windows. The Commission had ordered the company to offer a version of its Windows operating system without its software for playing digital music and movies on personal computers. It also ordered the company to (i) offer personal computer makers and consumers in Europe a stripped-down Windows with Microsoft’s media player removed and (ii) license to competitors the technical information for Microsoft’s software for servers, which would give rivals equal footing.

It also fined Microsoft 497 million euros ($665.5 million) which the company deposited in an escrow account. Microsoft is appealing the ruling, and had argued that the proposed sanctions should be suspended pending the outcome of the appeal (which of course will take years to work it way through the courts). But Judge Vesterdorf would have none of it.

The ruling applies only to Europe, but it represents the first time since antitrust challenges to Microsoft began in the 1990’s that the company will be forced to alter its core business strategy of bundling its software products and features with Windows. The commission ruled that Microsoft had abused its monopoly power to stifle competition in the markets for media players and operating systems on servers.

According to the New York Times report, “Microsoft will post the information for licensing its server software on a Web site within a day, the company said. Next month, Mr. Smith [Microsoft’s general counsel] said, Microsoft will have a stripped-down version of Windows available for PC makers, and that alternative should be available in the European marketplace by February.”

Wow! Who says there’s no such thing as Father Christmas?