## Facts

- Microsoft held a dominant position in the worldwide (or at least EEA-wide) market for Intel-compatible client PC operating systems, with a market share well above 90%.
- The Commission treated work group server operating systems (used to provide core network services to Windows client PCs) as a separate product market adjacent to client PC operating systems.
- The Commission treated streaming media players, including Windows Media Player (WMP), as a separate product market from the Windows operating system.
- In 1998, Sun Microsystems requested technical information enabling its work group server operating system to interoperate with Microsoft’s evolving Windows environment, particularly in connection with Windows 2000.
- Microsoft had previously licensed interoperability information, but later refused to supply updated interoperability information needed for rivals’ work group server operating systems to remain viable in Windows work group networks.
- From May 1999, Microsoft conditioned supply of the Windows client PC operating system on simultaneous acquisition of WMP by preinstalling WMP and not offering a version of Windows without it to OEMs or end users.
- In 2004, the Commission found two abuses: (i) refusal (since October 1998) to supply and license interoperability information for work group servers, and (ii) tying (since May 1999) WMP to Windows.
- The Commission imposed a substantial fine and ordered remedies including compulsory disclosure/licensing of interoperability information on reasonable and non-discriminatory terms and a Windows version without WMP.
- Microsoft sought annulment before the Court of First Instance (now the General Court), which largely upheld the Commission’s decision in 2007.

## Issues

1. Whether a dominant firm’s refusal to supply and license interoperability information necessary for rivals’ work group server operating systems constitutes an abuse of dominance under EU competition law.
2. Whether conditioning supply of a dominant client PC operating system on acquisition of a separate media player constitutes abusive tying.
3. Whether compulsory interoperability disclosure/licensing and an obligation to offer an unbundled operating system are proportionate remedies consistent with intellectual property protections.

## Decision

- The General Court largely dismissed Microsoft’s challenge and upheld the infringement findings for both the refusal to supply interoperability information and the tying of WMP.
- The court sustained the core remedies requiring interoperability disclosure/licensing on reasonable and non-discriminatory terms and requiring a version of Windows without WMP.
- The court upheld the principal fine, subject to limited adjustments concerning aspects of the monitoring trustee mechanism.

## Legal Principles

- A dominant undertaking bears a special responsibility not to impair effective competition through exclusionary conduct.
- In exceptional circumstances, a dominant firm’s refusal to supply or license protected technical information may be abusive where the input is indispensable for effective competition in a neighboring market and the refusal risks eliminating competition or prevents the emergence of products meeting consumer demand.
- Indispensability may be shown where rivals cannot realistically replicate interoperability necessary to compete because the dominant firm controls the platform and its technical evolution.
- Abuse may be found where refusal to disclose interoperability information foreseeably forecloses competitors and reduces their ability and incentives to innovate.
- Abusive tying generally requires: (i) dominance in the tying product, (ii) two distinct products, (iii) coercion/conditionality, and (iv) likely foreclosure effects.
- Foreclosure from tying can be established where bundling secures widespread presence of the tied product and, through network effects, reduces rivals’ distribution opportunities and limits user choice.
- Intellectual property rights do not immunize exclusionary conduct; competition-law remedies may require licensing or disclosure where justified by exceptional circumstances and tailored to restore competition.
- Remedies are lawful when appropriate and proportionate to end the infringement and prevent its recurrence, including disclosure obligations and offering an unbundled version of a product.

## Conclusion

The General Court upheld findings that Microsoft abused its dominant position by withholding interoperability information needed for competing work group server operating systems and by tying Windows Media Player to Windows, affirming major remedial obligations and a substantial fine as proportionate measures to restore competition in adjacent software markets.


Microsoft Corp. v. Comm’n, Case T-201/04 (Gen. Ct. Sept. 17, 2007)