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April 4, 2004

Sun/Microsoft: new deal blows open EC case

The European Commission's antitrust case against Microsoft [MSFT] was looking a lot shakier on Friday after Sun Microsystems [SUNW] settled its own case against the software giant. If the EC decides not to continue pursuing Microsoft, Redmond's strategic options may open up once more.

By CBR Staff Writer

Microsoft is paying $1.6 billion to settle Sun’s antitrust lawsuit.

Microsoft’s agreement with Sun may also have ensured the Windows vendor can continue to integrate further technologies and utilities into its operating systems, with a much reduced threat of legal action.

Friday’s agreement came just over a week after the Commission leveled a $613 million fine on Microsoft for anti-competitive behavior, following an investigation that was originally sparked by Sun’s complaints that the company had refused to provide interface information to enable its Solaris-based servers to connect to Windows-based PCs. The second element of the case concerned Microsoft’s integration of its Media Player into Windows.

Microsoft initially responded to the EU’s action by saying it would appeal the decision to the European Court of First Instance. The vendor said it was expecting the case to drag for another four or five years – but with Microsoft and Sun now friendly competitors, as opposed to mortal enemies, a substantial tranche of the EU’s case has been sliced away.

Microsoft’s success in blunting the European Commission’s action could have ramifications beyond Sun to Windows integration and the integration of Media Player. The head of the European Commission, Mario Monti, had presented the body’s investigation as setting a blueprint for future monopoly investigations, a key issue as Microsoft moves to integrate further elements into future versions of its operating system.

If the European Commission decides not to continue its pursuit of Microsoft, the vendor presumably can continue to integrate technologies into the OS, without having to worry about Brussels peering over its shoulder.

Ironically, Microsoft’s payout to Sun, $1.95 billion plus more royalties in the future, dwarfs the fine levied by the EU. However, the payout may seem like good value to Microsoft, if it means it no longer has to meet lawyer’s fees for fighting Sun through the US courts, and the European Commission through the EU’s own, Byzantine legal system, not to mention that $613 million EU fine.

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This article is based on material originally published by ComputerWire

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