Microsoft Says Proposed Settlement Would Have Been Better For European Consumers

REDMOND, Wash., March 24, 2004 — Microsoft Corp. today stated that its proposals to settle the European Commission investigation would have provided more choices for European consumers and more opportunity for software companies than the official decision announced today in Brussels, Belgium, by the European Commission.

“We worked hard to reach an agreement that would address the European Commission’s concerns and still allow us to innovate and improve our products for consumers,” said Steve Ballmer, chief executive officer of Microsoft. “We respect the Commission’s authority, but we believe that our settlement offer from last week would have offered far more choices and benefits to consumers.”

The company will seek legal review of the Commission’s decision in the Court of First Instance in Luxembourg, according to Brad Smith, senior vice president and general counsel of Microsoft.

During months of discussion and settlement negotiations leading up to today’s decision, Microsoft offered wide-ranging proposals to address issues regarding interoperability and the integration of media player functionality into Windows®
. The company proposed to provide competitors with unprecedented access to its technology. In addition, under Microsoft’s proposed settlement, any personal computer sold with the Windows operating system also would have carried three non- Microsoft media players, leading to the distribution of more than 1 billion competing media players over the next three years. At the Commission’s insistence, many of the provisions offered in Microsoft’s proposed settlement were worldwide in scope.

“We have acted responsibly while seeking to build the best products we can to meet the needs of our customers,” Smith said. “We believe that the Commission’s decision would actually reduce consumer choice and hurt European software developers.” He added, “We want to resolve these issues as quickly as possible, and we look forward to the possibility of continuing these discussions as this case moves forward.”

Microsoft research shows that consumers want greater functionality and ease of use from technology and that a broad majority of European consumers believe that Windows Media Player should be included in Windows. The Commission’s decision announced today would decrease Windows functionality and limit the technology integration that is in the interest of consumers.

“Throughout this process we have cooperated fully with the European Commission and demonstrated due respect for the process and its concerns,” said Ballmer. “As this case moves forward, you can rest assured we will respect and comply fully with European law, we will continue to invest in new technology breakthroughs, and we will continue to work to bring our innovations to our partners and customers.

“While we think today’s action is unfortunate, we will continue to cooperate and collaborate with European governments and the European industry to address shared concerns, such as interoperability, security, privacy, spam and keeping our children safe online,” Ballmer said.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

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