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SEPTEMBER 28, 2004
By Jay Greene Microsoft's Softer Tune with the EC Though still fighting the anticompetitive ruling, General Counsel Brad Smith has made conciliation a key business strategy Microsoft's day in court -- this time, Europe's Court of First Instance in Luxembourg -- doesn't come until Sept. 30. But the software giant is already on the offensive, holding court of its own with a Sept. 27 press conference in Brussels. In advance of a hearing to win a stay of remedies imposed by European regulators for anticompetitive conduct, Microsoft (MSFT ) General Counsel Brad Smith painted a picture of the Colossus of Redmond as a defendant that's willing to extend an olive branch. Smith laid out Microsoft's planned arguments. But he also explained how the company has spent money and time to prepare to comply with those remedies, should the court's president, Bo Vesterdorf, reject Microsoft's attempt to win a stay. It shouldn't be surprising that Microsoft would prepare to comply with a possible court ruling. But its approach has a distinct lack of belligerence. It disagrees with the remedy ordered by the European Commission, which ruled on Mar. 24 that Microsoft abused its operating system dominance by leveraging Windows into the media player and server operating system markets, and it fined the company $612 million. DOZENS OF DEALS. Among other things, the EC wants Microsoft to develop a version of Windows that doesn't include the Windows Media Player technology, used to play audio and video on PCs. Even though Microsoft opposes the remedy, it has nevertheless spent millions developing just such an operating system. Credit Smith, who's made conciliation a key business strategy at Microsoft. Since taking the top legal job in 2002, he has settled nearly two dozen cases, shelling out nearly $5 billion. In fact, the EC suit is one of the few remaining pieces of major litigation against the company, and Smith came close to resolving it last March. Then, he brought Microsoft CEO Steve Ballmer to Brussels to meet with EC competition czar Mario Monti for talks that eventually broke off. Expect negotiations to resume after Vesterdorf rules, which European legal scholars think will happen by yearend. Then, Microsoft and the EC should have a pretty good indication of what Vesterdorf thinks about their respective legal arguments. Should Microsoft win its stay, it's likely that the EC would return to the negotiating table, perhaps more willing to accept the company's proposal back in March that it include rival digital media programs, such as RealNetworks' (RNWK ) media player, with Windows worldwide. FULL-COURT PRESS. If Vesterdorf rules that the remedies take effect immediately, Microsoft will likely capitulate, agreeing to follow guidelines regulating its conduct as new markets emerge. When the hearings before Vesterdorf start, expect a full-court legal press from Microsoft. But know that the second Vesterdorf issues he ruling, Microsoft will press to put this last major case behind it.  Greene is BusinessWeek's Seattle bureau chief
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