From: Steve Ballmer
Sent: Thursday, March 18, 2004 11:54 AM
To: Microsoft and Subsidiaries: All FTE
Subject: Update on European Commission case
As you may have heard, Microsoft's efforts to reach an agreement that would resolve the European Commission investigation of the company have ended without a settlement. This means that the Commission will file a formal complaint against Microsoft, probably sometime next week, which will kick off a legal process that will likely extend for several years.
Because of the importance of this case and the attention it has generated, I wanted to take a moment to outline the steps we took to try to resolve this matter without litigation, and where the process goes from here.
While this is not the outcome we wanted, it is an outcome that I am confident will ultimately work out for the best. This is just one step in a lengthy legal process, and it's important to note that the Commission itself acknowledged the strong cooperative spirit and professionalism on both sides of the negotiations.
Although we did not reach a settlement, it certainly wasn't for lack of trying. Our legal team, led by Brad Smith, negotiated virtually non-stop for the past several months with Commission officials, and I spent three full days in Brussels this week when we felt that we were very close to a settlement.
We offered a number of proposals to address their concerns about interoperability and media player technology. Our proposals would have provided competitors with broad access to our technology, and unprecedented distribution for competing media players.
In the end, the Commission was very clear that the settlement terms we had offered were very responsive to their issues. In fact, they said that our proposals resolved the issues in the case, but that they wanted to go beyond the specific issues in this case to try to create a precedent that would govern our ability to include new features into future versions of Windows.
We made a number of significant proposals to try to address their desires in this area, while protecting our ability to innovate in Windows, but given the lack of clear legal rules regarding software integration, we were unable to agree to a single rule that would govern all future integration scenarios. We think it is very important that the benefits of software integration to consumers and developers be considered along with the effect on any particular competitor. Today's developments will provide the European courts with an opportunity to provide guidance and clarity on this matter.
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As we move forward, it's important to put this legal issue into proper perspective. I feel good about the process we went through, and the offers we made to settle the case. We did not hold back on any reasonable offers, and we clearly went the extra mile. While it is unfortunate that we didn't reach an agreement, we will continue to work closely with the Commission and other European governments in a spirit of cooperation on a wide range of issues – including privacy, security, education, and IT skills development. And our commitment to our European business and European customers and developers is obviously unwavering.
In the weeks ahead, the Commission will formally file its case, and we will exercise our right of appeal. As our legal team works to win this case and resolve the other legal issues facing the company, I would ask that all of you stay focused on your work – we have tremendous opportunities in the months and years ahead, and we need to continue to fire on all cylinders in order to reach our full potential.
Thanks for all the work you do, and we will of course update you on this and other issues as events warrant.
Steve
