Ballmer: Don't stifle innovation

Microsoft chief executive Steve Ballmer vowed to fight the European Commission's antitrust ruling, arguing that all companies, even ones with a near monopoly, have a right to improve their products.

Ballmer's comments follow a decision by the European Commission earlier on Wednesday, which involved ordering Microsoft to offer a version of Windows that comes without the Windows Media Player and to share enough of its intellectual property to enable server industry rivals to sell machines that can effectively interoperate with Windows-based computers. The commission also imposed a record €497m fine against the software behemoth.

"There is an important principle at stake in this case: We believe that every company should have the ability to improve its products to meet the needs of consumers," Ballmer said during a conference call with journalists. "We recognise the sort of special position our company has, but nonetheless we think we should have that ability to improve our products, subject to the appropriate guidelines."

Microsoft executives tried to make the case that the European ruling, if it comes to pass, will hurt consumers.

"Even if one takes away the multimedia code and, as RealNetworks has suggested, installs their player in its place, there will remain over 20 features in the Windows operating system that will not function," Microsoft's chief lawyer, Brad Smith, said during the conference call. "There will remain many European Web sites that will not function properly."

Smith noted that the same competitors that sought action from the European Commission had already tried and failed to get a similar action from US courts.

"Our competitors had their day in court, and it's unfortunate that after that day came and went they simply chose to move across the Atlantic to try to have a day in another court," Smith said.

The ruling is not expected to immediately change the way Microsoft thinks about its future products, including Longhorn, the next major revision to Windows.

"We're not doing anything different than we were yesterday in terms of how we think about new design," Ballmer said. Both he and Smith noted that Microsoft's development efforts already have been influenced by the consent decree in the US vs Microsoft case.

"We've had lawyers already giving legal advice to our development teams about the development of future versions of Windows," Smith said. "That advice would change if, and only if, the European Commission is now saying that the law in Europe is now different than the law in the United States."

A Microsoft representative said the company would have to review the details of the ruling to see exactly how its current and future products might be affected.

Although Microsoft and the European Union appear to be at loggerheads on the issue of future development, Ballmer indicated that there could be an opportunity to settle the case once a European court has weighed in, noting that that's what transpired in the US case. Smith pointed out that there were extensive settlement talks that failed to reach a pact in 1999 but that parties were able to find middle ground within a few months after an appeals court issued its decision in the summer of 2001.

"One can never predict the future, but it would not surprise us if the path in Europe were to follow something similar to what we saw in the United States," Smith said.

Nonetheless, while Ballmer and Smith said the company remains open to settling the case, Microsoft signalled it is also prepared for a long litigation process.

"At the end of the day, we do believe there are important principles at stake," Smith said. "Even though the litigation process may well last four or five years, we think those are principles that are worth standing up [for] and defending."