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Microsoft's Ballmer Joins Talks With EU Regulators

March 17, 2004|Joseph Menn | Times Staff Writer

In a last-ditch bid to avoid stiff sanctions, Microsoft Corp. Chief Executive Steve Ballmer flew to Brussels for an unexpected meeting Tuesday with Europe's top antitrust official.

Microsoft has been negotiating for months to settle the European Commission's antitrust case against it, but Tuesday marked the first time Ballmer joined the talks. He had previously met Competition Commissioner Mario Monti without discussing the case.

Ballmer's face-to-face talks with Monti increased the chances for a settlement, analysts said, and underscored how crucial the case has become to the world's largest software company.

"Largely since Steve Ballmer has taken the helm of the company, Microsoft has taken the initiative to settle almost whatever they can," said analyst Matt Rosoff of Directions on Microsoft. "They learned from the long fight with the Department of Justice that it's very difficult to take on large government bodies."

Ballmer, Microsoft General Counsel Brad Smith and other executives met for hours with Monti and his staff. On Monday, Monti had won unanimous backing for sanctions from regulators representing the 15 countries in the European Union.

Monti's spokeswoman, Amelia Torres, said that "discussions are ongoing," and people briefed on the talks said they probably would resume today.

"We remain actively engaged with the commission," said Microsoft spokesman Jim Desler.

Without a deal, the commission is expected to fine Microsoft more than $100 million on March 24. It also would probably order the Redmond, Wash.-based software company to disclose technical information about how some of its programs interact.

The greatest concern for Microsoft may be the anticipated ruling on Microsoft's Windows Media Player, which is incorporated into the Windows operating system powering more than 90% of the world's personal computers.

The commission, the EU's executive arm, has concluded that Microsoft illegally used its Windows monopoly to push its media player at the expense of competitors such as RealNetworks Inc.

People familiar with the commission's draft order said it called on Microsoft to offer a version of Windows without the media player, which would mark the first time that the company has been ordered to change what it includes in the operating system. Such a ruling could open the door to similar orders in the future.

U.S. authorities considered such a step but dropped it during negotiations with Microsoft. The Justice Department settled its antitrust case against Microsoft in 2002.

The company is free to appeal an adverse ruling, but that process could take years and would continue the legal uncertainty that has weighed down Microsoft's stock and kept the firm from distributing more of the $50 billion in cash on its books.

"Closure is always good, because you never know if you're going to get a wild outcome," said Wells Fargo Securities analyst Eric Upin. "Getting closure on this would give them greater flexibility to start increasing their dividend."

Microsoft shares rose 2 cents to $25.18 on Nasdaq.

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