Stripped Windows

The headlines have been fairly breathless: A judge in the European Union dimmed chances of further negotiations between Microsoft (Nasdaq: MSFT) and European Commission regulators about the demand that the software giant offer its Windows operating system without other functions bundled in, most notably the program that plays music and video streams. The argument is that bundling in peripheral products to Windows provides Microsoft with an unfair advantage over other companies such as RealNetworks (Nasdaq: RNWK).

The court ruled that Microsoft must divulge certain trade secrets to its competitors so that their programs will work better on Windows-run computers, though the extent of the code Microsoft must share is not immediately known. The Luxembourg-based court found that Microsoft had not "shown that it might suffer serious and irreparable damage as a result of implementation of the contested decision." Its decision forces immediate compliance with EU demands handed down this past March. Microsoft has stated that it will comply with the court order.

While this order is certainly negative to Microsoft, it will be unlikely to make much of a difference as far as the company is concerned. It certainly isn't ecstatic about having to pull the skirt up on some of its code, but by the same token there is some substantial doubt as to whether a version of Windows that has Media Player unbundled will see much consumer demand.

What's most important here is that the loss, should it stand on inevitable appeal, presents a legal precedent for the EU to act on future products and enhancements Microsoft may wish to bundle into Windows or other operating systems. Should Microsoft go after Google (Nasdaq: GOOG), or Adobe's (Nasdaq: ADBE) Acrobat software, or antivirus software in competition with McAfee (NYSE: MFE) by bundling them into Windows, it will likely have to look over its shoulder at the potential for further action by the EU.

That in and of itself is problematic for Old Softie, which is why Microsoft's lawyers are promising to press forward even as the company prepares to comply with the ruling on Media Player.

Bill Mann owns none of the companies mentioned in this story.