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123webguru News Desk
Microsoft antitrust proposal wins over EU
By David Lawsky and John Chalmers
BONN/BRUSSELS (Reuters) - Microsoft (MSFT.O: Quote, Profile, Research) cleared a major stumbling block on Monday and won praise from the European Commission for finally putting forward acceptable proposals to comply with European Union antitrust sanctions.
The risk that the EU executive might hit the world's largest software company with a fine of up to $5 million a day receded because Microsoft's proposal allows non-Microsoft work group servers to interoperate with Windows personal computers and servers.
The plan will be put to industry peers for their opinion over the next two weeks of market testing before the Commission makes a final assessment, but an open-source software group that is a major rival raised immediate objections.
The Commission postponed the most troubling questions about open-source licenses until an EU court rules next year on Microsoft's broad challenge against its antitrust decision.
Open-source software is distributed freely to software developers as long as they make public any underlying source code, and Microsoft's proposal would not allow public distribution of its code.
"The only potential competition for Microsoft in the work group service space comes from the open source groups Samba, Novell and Red Hat," said Thomas Vinje, a lawyer representing several rivals of Microsoft.
The Commission, which polices competition in the 25-nation bloc, fined Microsoft a record 497 million euros ($609.8 million) more than a year ago and demanded changes to its business practices, which it found were an abuse of its quasi-monopoly on computer software.
"I am happy that Microsoft has recognized certain principles which must underlie its implementation of the Commission's decision," European Competition Commissioner Neelie Kroes said in a statement.
Analysts welcomed the decision.
"It seems likely to me it's effectively coming to completion," said Alan Davis, analyst at McAdam Wright Ragen in Seattle.
WORLDWIDE SURPRISE
Microsoft Chief Executive Steve Ballmer said in a statement the company would "focus on fulfilling all our obligations in every way we can.
"In order to resolve some complex issues over the past few weeks, we've made some tough concessions," Ballmer said.
In a surprise move, the interoperability agreements will now apply worldwide instead of only in Europe as the Commission had required.
That is a two-edged sword, because the company takes the position that the worldwide obligation will also bring into play any and all patent and trademark protection it holds in countries outside the European Union.
Kroes told reporters there were no outstanding issues on Windows Media Player, the second of two antitrust violations for which Microsoft might face fines.
Microsoft was required to make its ubiquitous Windows operating system available without Windows Media Player so that computer makers can buy alternative software from RealNetworks (RNWK.O: Quote, Profile, Research) and Apple (AAPL.O: Quote, Profile, Research) to play films and music.
Microsoft shares closed down 6 cents to $25.37 in Nasdaq trading on Monday.
COURT RESTRICTIONS
Under the Commission's interoperability demands, Microsoft must share information with rival makers of servers used to run printers and retrieve files.
But Commissioner Kroes told reporters on the sidelines of an International Competition Network meeting in Bonn, Germany, that the Commission would have to wait until a court decision this spring to require Microsoft to provide an open-source license.
Microsoft has said it doesn't want to give free access to software code on which it could earn revenue.
A European Union judge placed temporary restrictions on information disclosure in December.
"We can't take risks," Kroes said. "We have to be aware that the Court of First Instance is watching us and rightly so."
If the Commission went too far, Microsoft could take it back to court, risking further delays.
The Free Software Foundation, which distributes open-source Samba server software, was quick to respond to the latest move.
"They set terms which exclude the only remaining competitor in the market -- Samba," said Georg Greve, president of the foundation, in Hamburg, Germany. "They obviously know that you get information but you cannot implement it."
Samba's license requires it to reveal source code to users, while Microsoft bars it from doing so.
Two lawyers -- one for Samba and a second who has represented clients against Microsoft -- said that they needed more information.
"The whole Microsoft strategy is to delay implementation of the measures until the market evolves and they are ineffective," said Samba's lawyer, Carlo Piana, in Milan, Italy.
In the view of some experts, the proposal will allow the Free Software Foundation to develop software, which it must withhold from the market until and unless the Commission wins.
At that point, they said, free software developers would be able to publish the information with their software for non-innovative protocols.
(Additional reporting by Reed Stevenson in Seattle)
($1=.8150 Euro)
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http://www.microsite.reuters.com
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