Microsoft has issued a scathing response to the full text of the European Commission's anti-trust decision [pdf] against the company, accusing EC competition authorities of creating "new law in an effort to justify unprecedented regulatory intervention".
The decision, due to be published later this week, was leaked widely to the press on Thursday. According to a version of the text published by the Wall Street Journal, the 300 pages+ document reveals, among other things, that the EC arrived at the final sum for Microsoft's fine by doubling its original figure and then adding on another 50 percent because of the long duration of the company's infringement.
Microsoft argues that the decision establishes "novel legal standards" that "will have an adverse impact on intellectual property rights and the ability of dominant firms to innovate".
Dominant firms - which Microsoft argues are defined far too narrowly by the EC - are held up to absurd standards which will remove incentives to innovate, according to the software giant's response. For one, the decision's logic would force them to license their technology under almost any circumstances; it "opens the door for even a single complaining component supplier to argue that innovation should be thwarted if its market position may be harmed", Microsoft said.
The ill effects won't be limited to the software industry either, as the decision will "put at risk the economic incentives for a broad range of companies and industries", Microsoft argued.
The decision shows the EC originally set Microsoft's fine at 165.7 million euros, in order to "reflect the gravity of the infringement". Later, taking Microsoft's "significant economic capacity" into account, the EC decided to double the fine to 331.4 million euros. Finally, taking into account the "long duration" of Microsoft's infringement and the fact that Microsoft did not change its business practices during the period - commencing October 1998 and lasting five years and five months - the EC increased the fine by another 50 percent to 497 million euros.
The decision argued that the fine needed to be significant in order to "ensure a sufficient deterrent effect". The software giant is "the largest company in the world by market capitalisation", the EC noted, noting Microsoft's June 2003 cash reserve of $49 million, its overall 41 percent profit margin, and its 81 percent profit margin on Windows.
According to the EC, Microsoft was fined for abusing its dominance in the operating systems market by failing to release compatibility information about Windows to server software competitors. The commission also said Microsoft used its operating system monopoly to force its way into other kinds of software, such as media players.
In the decision last month, Microsoft was ordered to supply a version of Windows without its media player within 90 days. The company had 120 days to provide information to server competitors.
An EC spokeswoman said the body plans to publish the full text on Friday. [Now available here.]