Microsoft makes more code public

[Al-khiyal]

October 23, 2007 -- Microsoft yesterday caved in to the European commission and agreed to comply with a landmark anti-trust ruling more than three years after it began a rearguard action against the decision and a record €497m (£347m) fine.

In a move hailed by Neelie Kroes, EU competition commissioner, as opening up the global IT market to greater consumer choice, the world's biggest software company accepted swingeing price cuts for interoperability information that would enable rival servers to work smoothly with its Windows operating system.

The company, which has been fined a total of €777.5m plus interest in the past three years, also tried to bury the hatchet with the EU's competition regulator by saying it would not appeal against last month's decision, by the court of first instance, to strike down its appeal against the March 2004 commission ruling on its abuse of dominance.

Microsoft now hopes that Ms Kroes will not levy further fines for its failure to comply with the 2004 ruling from December 2005 until yesterday. Last week it said in an SEC filing in New York that it was potentially liable to penalties of $1.6bn up to the end of June alone.

Drawing a line under the EU's most high-profile anti-trust case, Ms Kroes said: "I sincerely hope we can close this dark chapter in our relationship and go on in an absolutely close and constructive way...I feel a bit sad as it took so long, so many years when the consumer suffered because Microsoft didn't go along with what the commission asked it to do."

But she made plain she had not yet decided to waive further fines for past non-compliance and would continue to examine other pending cases, the most outstanding of which is being brought by ECIS, a lobby representing Microsoft's biggest opponents such as IBM, Red Hat and Sun, over its new Vista operating system. "This shop is still open," she said. Most legal observers believe, however, that the nine-year battle since 1998 between the EU and Microsoft is virtually over. Alec Burnside of Linklaters said: "It has the flavour of everyone downing their weapons and looking to the future rather than continuing to fight old battles."

The deal that Ms Kroes refused to call a settlement began with a dinner for Steve Ballmer, Microsoft's chief executive, in a restaurant near her home in The Hague straight after the CFI judgment. Negotiations that continued almost daily ended yesterday. Under the deal Microsoft has agreed that open source software developers for the rival Linux operating system, seen by the EU as its sole rival in a market it dominates by 80%, will be able to access and use the "complete and accurate" interoperability information.

In a remarkable climb-down it has accepted a one-off fee of only €10,000 in royalties for this information and a slashing of its original demand for 5.95% of product revenues for a worldwide patented licence to a mere 0.4%. This is seen by lawyers as in effect price-fixing for intellectual property rights (IPRs) and their downgrading before consumer rights.

Agreements that Microsoft strikes with rival developers will be enforceable in London's high court, seen as the premier European court for handling high-profile IPR and international contract cases.

The commission, meanwhile, extended its deadline for its inquiry into Google's $1.5bn purchase of internet advertising broker DoubleClick from October 26 to November 13. Julia Holtz, Google's competition counsel in Europe, said her company had told the EU it would keep certain DoubleClick business practices "unchanged" while Andrew Cecil, head of public policy at Yahoo! Europe, an opponent of the merger, insisted the deal would strengthen Google's dominance.

Microsoft gives up three-year battle to keep Windows closed to rivals

[Al-khiyal]

Microsoft makes more code public

BERLIN, February 21, 2008: Microsoft, facing new antitrust investigations in Europe, published 30,000 pages of previously secret software code for its ubiquitous Windows operating system on its Web site Thursday, in what the company described as a significant concession toward greater openness and compatibility with competitors.

But the European Commission and some of those competitors reacted coolly to the disclosure by the world's largest software maker, noting that Microsoft had made similar claims in the past which turned out to be only small changes in the status quo.

"The commission would welcome any move towards genuine interoperability," the commission said. "Nonetheless, the commission notes that today's announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability."

Microsoft lost a landmark court case in Europe last autumn and in October abandoned its appeal of the commission's judgment in 2004 that it had abused the dominance of its Windows operating system to gain unfair market advantages. But the legal surrender, coming at the end of almost a decade of litigation, did not end Microsoft's problems in Europe.

In January, the commission opened two new investigations into Microsoft's business practices - one related to the interoperability of its Office suite, server and open-document format, and the other into its practice of bundling software applications like its Internet Explorer Web browser into Office.

On Thursday, the chief executive, Steve Ballmer, said the decision to publish documentation for Windows - previously available for a license fee - was a significant change in philosophy and a recognition that consumers are demanding interoperable software.

Ballmer said Microsoft would publish "thousands" more pages of similar documentation on its Web site starting in April. "These steps represent an important step and significant change in how we share information about our products and technologies," he said.

Microsoft said it would sell licenses to individuals and companies wishing to sell products developed from its software coding. Brad Smith, Microsoft's general legal counsel, said the concessions were real and not just meant to sway European regulators.

"This documentation took years and millions of dollars of software engineering work to create," Smith said.

But critics said Microsoft's claims were overblown, and noted that businesses wanting to sell a product based on Microsoft software would have to pay substantial license fees.

"Today's announcement is still all about the rest of the world interoperating with Microsoft on Microsoft's own terms, not the other way around," said Thomas Vintje, a lawyer representing the European Committee for Interoperable Systems, a Brussels-based group representing Microsoft competitors like Adobe, Nokia and Oracle, which brought one of the new complaints that led to the current EU commission investigations of the company. "The world needs a permanent change in Microsoft's behavior, not just another announcement," he said.

[Al-khiyal]

European commission fines Microsoft record €899 million

February 27, 2008 -- The EU today imposed a record €899m (£680m) fine on Microsoft for charging "unreasonable" prices to rivals for access to its dominant software.

The fine, the largest imposed on a single company, brings the total levied on the world's leading software group close to €1.7bn in the past four years.

Neelie Kroes, EU competition commissioner, who said she had no pleasure in imposing the fine, told journalists she could have charged Microsoft €1.5bn in the latest penalty.

The fine, representing 60% of the maximum, reflects the 488 days – until October 22 2007 - in which Microsoft refused to comply with the commission's March 2004 anti-trust ruling.

Denying vindictiveness, she insisted the new penalty was "reasonable and proportionate" and should be "a clear signal to the outside world and especially Microsoft that they should stick to the rules".

"Microsoft is the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an anti-trust decision," she said. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance."

The company's immediate reaction was to suggest that the latest fine was about past issues that had been resolved and point to new working practices to make its products more open, especially last week's deal on inter-operability with the "open source" community of software developers.

But Kroes, reiterating that she was investigating two further complaints against the group regarding inter-operability, warned that she could impose further penalties unless the company underwent a genuine change in behaviour. A press release, she said, did not necessarily indicate a change in business practice.

"I'm not naive," she said. "I'm not in the mood when someone is talking about inter-operability to accept this as change. First show me. Talk is cheap; flouting the rules is expensive so let's wait and find the reality in this context. If you flout the rules you will be caught and it will cost you dear."

Microsoft initially set a royalty fee of 3.87% of a licensee's product revenues for a patent licence, giving a rival access to secret protocols behind its Windows operating system, and only reduced this to a flat €10,000 after two further offers.

Kroes pointed out that, during the protracted negotiations with Microsoft over compliance in the past few years, it had four times promised to change its behaviour. "Hopefully, it will be at the fifth time but they have to deliver," she said.

The EU fined Microsoft an initial €497m, then a record, in March 2004 and added on €280.5m in July 2006 for non-compliance with its ruling.

Kroes accused Microsoft of continuing to abuse its powerful market position, stifling innovation and damaging consumers. "Directly and indirectly, this had negative effects on millions of offices in companies and governments around the world."