Microsoft Loses EU Sanctions Appeal; to Unbundle Media Player

Microsoft on Wednesday lost a European Union court appeal and has been ordered to unbundle its Windows Media Player from the operating system and to share server technology with its competitors. Microsoft General Counsel Brad Smith said the company Microsoft hasnit yet decided whether it will appeal the ruling but probably now will turn its attention to winning a separate, overall appeal against the EU penalties.

Bo Vesterdorf, president of the European Court of First Instance, said that Microsoft must comply with penalties imposed by the European Commission in March even as the companyis works its way through an appeal.

The ruling is a major blow to Microsoft, which had sought to stay the sanctions to forestall potentially precedent-setting changes to its business model.

The options now for Microsoft are few. Microsoft said they would like to try to reach a settlement with the European Commission before the case goes to litigation. "Our preference would be to find a way to sit down and work this out," Mr. Smith said at a press conference call. "If that opportunity doesnit arise, I remain optimistic that weill be successful at the end of the litigation process."

Saying there is no room for negotiations, EU spokesman Jonathan Todd said regulators expected Microsoft to press ahead with changes immediately. Microsoft agrees saying the company is erady to launch a Web site to offer rivals access to secret codes demanded by EU regulators. It also pledged to supply an unbundled version of Windows to resellers by January, which would make the new product available to computer users by February.

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