European Court rejects Microsoft appeal over Media Player

Microsoft lost the first stage of a landmark battle with European regulators, as a European court threw out a bid to stall a far-reaching ruling against the software giant.

Yesterday's decision means Microsoft will have to act swiftly to market a version of its Windows system without a music and video-playing programme, and will need to share some trade secrets with competitors.

Microsoft had hoped to postpone such a move, pending an appeal against an earlier decision of the European Commission. But its hopes of a stay of execution were dashed by the European Court of First Instance. The ruling was greeted with relief by the European Commission which has been on the defensive after several of its recent judgments were overturned by the court.

Microsoft's lawyers said the judge had not ruled on the substance of the complaint, and indicated there was a case to answer on several key issues.

The case will play a crucial role in determining the extent to which products can be "bundled" together. In March the Commission fined Microsoft €497m (£347m) for abusing its position of dominance in the global software market. Microsoft tied its Windows Media Player with the Windows Operating System and refused to supply information which would make competitors' software usable with its products.

Music and video software is a growing market, and the decision has huge implications for Microsoft, which said it would comply with the ruling as quickly as possible.

A spokesman for the European Competition Commissioner, Neelie Kroes, said the decision would benefit consumers of computer products and also stimulate innovation.

Microsoft has settled with four of the five major players upon whom the case was based, but the Seattle-based RealNetworks remains an opponent.