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EU Fines Microsoft, Orders Change of Business Practices

The European Union has fined the giant U.S. software company Microsoft a record $611 million, accusing the firm of abusing its monopoly in the computer systems market and violating EU antitrust law. The European Union is also demanding that Microsoft take steps to make its Windows operating system more compatible with software made by its competitors.

EU Competition Commissioner Mario Monti told reporters that Microsoft had shut out other companies' products, and said the European Union acted in the best interests of innovation and European consumers. "We are simply insuring that anyone who develops new software has a fair opportunity to compete in the marketplace," he said.

Microsoft says it will appeal Wednesday's ruling at the European Court of Justice in Luxembourg. It has two months to do so.

The fine is bad enough, but what really bothers Microsoft is the EU requirement that it put out a version of Windows within 90 days that does not include its Media Player audio-visual software.

Developers of rival audio-visual software say Microsoft's practice of attaching Media Player to Windows shuts them out of a lucrative market.

Microsoft Vice president Brad Smith says the EU decision is unfortunate. "We think it is a big step in the wrong direction," he said. "It helps competitors by penalizing customers, and, in that sense, we think that it got the equation wrong."

Mr. Smith says he will ask the European Court to stay the order pending Microsoft's appeal. That is a process that can take years.

The EU antitrust regulators have lost some cases on appeal in recent years, but the competition commissioner, Mr. Monti, says he is confident that this time the EU case will hold up.

Mr. Smith says he is equally optimistic that the court will see things Microsoft's way.

He complained that the European Union turned down the firm's proposal to immediately release a version of Windows with three competing media players in addition to Microsoft's own. But the European Union said that would have allowed Microsoft to dictate future standards for how digital music and video files are encoded, distributed, and played.

Microsoft, whose Windows software runs roughly 90 percent of personal computers worldwide, says the EU ruling will prevent it from offering customers a constantly improving product. But the European Union is determined to show it can influence how powerful companies operate on the continent, where billions of dollars worth of business is at stake.