Microsoft told a special 13-judge court on Monday the European Commission made fundamental errors in deciding that the company illegally tied Windows Media Player to its near-monopoly operating system.
"That theory is flawed at every step," Microsoft lawyer Jean-Francois Bellis told Europe's second-highest court, the Court of First Instance, in opening remarks during the software giant's challenge to the landmark 2004 decision.
Instead, he said, consumers had benefited from Microsoft's improved Windows and competition in the audio-visual software industry was thriving, contrary to the Commission's predictions that rival media player providers would become extinct.
The Commission, the executive arm of the European Union, found Microsoft had abused a virtual monopoly in its Windows operating system to muscle out rivals.
It imposed a record 497 million euro ($613 million) fine and ordered Microsoft to change the way it sold software.
The Commission ordered Microsoft to sell a version of Windows without Windows Media Player, which is audiovisual software used to watch movies and television and listen to the radio over the Internet.
The idea was that computer makers would take the stripped-down version of Windows, known as XPN, and sell it with rival audiovisual software such as RealNetworks' RealPlayer or Apple Computer's Quicktime.
"As of today no PC maker has shipped a version of XPN ... not a single one," said Microsoft's lawyer, Jean-Francois Bellis, noting that such companies accounted for nine out of 10 sales of Windows.
As for the rest, stores ordered 1,787 copies of XPN among 35 million copies of Windows, giving it an order ratio of 0.005 percent, he said.
Bellis reviewed the Commission's finding against Microsoft and said the company could have avoided a violation of the law had it shipped XPN from the beginning.
But Bellis said that would have made little sense.
"The Commission made fundamental errors of fact and reasoning" in finding that Microsoft broke the law because of its "failure to offer a product that nobody wants", Bellis argued.
Instead, he said, the Commission should have looked at the benefits obtained from getting Windows with Windows Media Player, such as giving a standard programme to developers.
The judges asked no questions during the presentation.
However, opponents of Microsoft said in a statement issued during a break that it was disingenuous to talk about lack of demand because by the time XPN was offered "competition was largely eliminated and consumer choice as well."
Microsoft also cited the use of Macromedia Flash 8, which it said was installed on more than half of all European and US computers connected to the Internet, with 80 percent projected by the end of this year.
Microsoft critics replied during the break that Flash 8 was not a direct competitor of Windows Media Player and did not offer the same functionality.
The Commission was to reply to Microsoft later on Monday, the first of five days of hearings.
On Wednesday and Thursday, the judges will hear Microsoft's challenge against the Commission's finding that it deliberately withheld information from rival makers of work group servers, so their software would not work as well as Microsoft's own.
If Microsoft prevails, Brussels' authority for any future action against the company will be in tatters. A decision in this case is not expected for months, possibly a year.
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