LUXEMBOURG, April 24, 2006 — The following excerpts are from the opening statement to the Court of First Instance by Jean-Francois Bellis, counsel for Microsoft, during the company’s appeal of the European Commission’s 2004 decision pertaining to the integration of multimedia functionality into the Windows operating system:

“To take an analogy used by the Commission itself, the fact that laces are sold separately from shoes does not demonstrate that shoe manufacturers are engaged in a tying practice by selling shoes only with laces. One must still consider whether there is demand for shoes without laces.”

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“One would look in vain in the voluminous file of this case, consisting of tens of thousands of pages, for a letter sent to just one PC manufacturer asking whether it would have any interest replacing the media functionality in Windows with a third-party media player.”

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“It is a simple fact that features of Windows, applications and Web sites that are developed in reliance on the media functionality Windows will not work if this functionality is absent from the operating system, and this remains true even if a third-party media player is installed on the PC.”

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“Throughout the proceedings, the Commission has not identified a single customer that would want to obtain Windows without the media functionality at issue. Indeed, it is difficult to see why consumers would ever want to obtain a version of Windows without its own media functionality. Such a version would not make it any easier for them to use third-party media player.”

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“The absence of demand for a PC operating system without its own media functionality is further demonstrated by the practice of all other commercial vendors of PC operating systems…. It is normal practice for all PC operating systems to include media functionality.”

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“As of today, no PC manufacturer has shipped a PC with Windows XP N installed. Not Toshiba. Not HP. Not a single one.”

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“As of 31 March 2006, 1,787 copies of Windows XP N had been ordered by retail shops. Again, to be precise, this represents less than zero point zero zero five percent of all sales of Windows XP in Europe over the same period, which amount to approximately 35 million units.”

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“Microsoft does not know how many of the 1,787 copies ordered by retailers were ultimately purchased by consumers. But this cannot be much. Of course, one cannot exclude the possibility that some consumers may have bought Windows XP N to have a souvenir of the only version of Windows designed by DG Competition, or may have bought it by mistake, confusing it with Windows XP.”

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“There is no demand for a version of Windows without the media functionality at issue. The Commission has therefore failed to demonstrate that Microsoft has unlawfully tied two separate products, and, for this reason alone, its decision must be annulled.”

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“The existence of the media functionality in Windows does not prevent users from obtaining, installing and using and third-party media player of their choosing, nor does it prevent PC manufacturers from pre-installing as many third-party media players as they wish to install. In fact the evidence demonstrates that consumers use multiple media players, and PC manufacturers pre-install multiple media players on their PCs.”

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“Microsoft deliberately designed the Windows operating system to ensure that consumers and PC manufacturers could install as many third-party media players as they wish on the PC. In addition, it exposed this functionality so that third-party media players could rely on it to function. As a matter of fact, usage of multiple media players is common, something that the Commission does not deny.”

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“[In the AOL/TimeWarner decision of 2000, the Commission found that] ‘music players can be freely and easily downloaded on a PC, which may support more than one player.’”

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“Although the Commission is no doubt sensitive to the need to ensure the widest possible dissemination of information on its activities, streaming media content on the Commission’s Web site is encoded exclusively in the RealNetworks format.”

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“Today, multiple formats continue to be used and there are more media players available to consumers than ever.”

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“Consumers expect that products will take advantage of technological advances over time. Thus, consumer products are continually improved by the addition of new capabilities. This is true across a wide spectrum of products, from cars to mobile telephones, and PC operating systems are no different. This point is confirmed, by the complete lack of success of Windows XP N, a product offered with less functionality than its counterparts.”

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“The benefits of exposing more capabilities in Windows are also clear. As more capabilities are exposed in Windows, more capabilities can be relied upon by third-party developers and hardware manufacturers, leading to further improvements in their own products.”

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“The failure to offer a product which nobody wants cannot be an abuse. The media functionality in Windows does not foreclose competition, and its constant improvement is in line with what consumers, PC manufacturers and third party software developers expect from a modern PC operating system.”