Microsoft's Ballmer, Smith on impact of EU ruling

Will Microsoft change its approach to Windows development? Will it think twice next time before adding new functionality that could compete with standalone programs? Those are a couple of the big questions following the denial of the company's antitrust appeal Monday by the European Court of First Instance.

Here's what Brad Smith, Microsoft's general counsel, said on the subject when I spoke with him yesterday afternoon.

"I think we need to break down the issue into a few different categories. The first thing we have to do is look at Windows XP. I don't think that there are any issues that are pending with respect to Windows XP.

"The next issue is Windows Vista. We had a very comprehensive discussion with the European Commission last year about Vista. Of course, as they made clear, they don't give a green light. There are no issues now on which there are yellow or red lights, so I feel pretty good about where we are. At the same time, I don't think we can rule out entirely the possibility that someone might read today's decision and come to Brussels with some new issue. If so, we'll just have to take that one step at a time.

Continued from main: "And then the third question is the future, and what this means for future versions of Windows. We'll have time to digest this. We'll have time to have the right kinds of conversations with the European Commission. There may be times in the future when we'll add new features into Windows and need to address them in some different way because of today's decision. I think it's too early to draw that conclusion right now. But I think it's going to require that kind of comprehensive approach to our thinking to really sift through all of this."

"While this is a disappointing outcome, we have already been living under the Commission's decision for more than three years, and we have taken steps to try to fully comply. We created versions of Windows XP and Windows Vista without media player capabilities, we established a licensing program for our protocols, and we paid the fine in 2004. In addition, we've already adopted voluntary standards for how we integrate new features into our products in order to preserve competitive opportunities, and we continue to actively pursue interoperability because it's what our customers need.

"There may be additional steps necessary to ensure that we are in full compliance with European law. We are in close contact with the European competition authorities and we will be discussing this with them in the days to come.

"While we had hoped for a different outcome, it is important to recognize that the Court's judgment should not adversely affect our customers in the short-run. Today's ruling was very clear that we can still offer our full-featured products to our customers. While we do have concerns about how the legal precedents in the Commission's decision and today's ruling will affect innovation and intellectual property, we can still provide our customers with the same products, services and support that we were providing prior to today's decision."