Thursday, April 27, 2006

Microsoft zapped in the EU

Reuters reports today:

A European Union judge on Thursday challenged a landmark European Commission antitrust decision that software giant Microsoft abused its dominance by illegally muscling out rivals.

As part of the 2004 decision, the Commission said Microsoft should provide competitors with technical information to allow them to make server software that works smoothly with Microsoft's Windows, used by 95 percent of the world's PCs.

The Commission says that without this information, rivals cannot compete with viable, or interoperable, non-Microsoft software. Microsoft argues that this amounts to losing technology that is protected by intellectual-property rights. Court of First Instance Judge John Cooke, in charge of the case on the 13-member special panel, asked tough questions of the Commission lawyers on the fourth day of a weeklong hearing.

"The information which forms interoperability is hugely valuable commercial information," said Cooke, who is responsible for writing a draft ruling.

He asked the Commission whether "competition rules require that (to) be taken away from Microsoft, conveying a huge commercial advantage."

The Commission's reputation as Europe's top antitrust authority hinges on the outcome of the hearing, which is investigating whether to uphold the 2004 decision.

The ruling will take months to reach.

As part of its decision, the Commission ordered Microsoft to change its business practices, which included providing the technical specifications. It also hit the company with a record fine of 497 million euros ($617 million).

In answer to Cooke's probing, a Commission patents and copyright lawyer said the court had said in the past that enough information must be given to permit others to compete or to create an "effective competitive structure."

The Commission on Wednesday argued that it merely ordered Microsoft to move back toward its earlier, more equitable pattern of doing business in the field, where supplying such information was the norm.


The Commission ordered Microsoft to provide protocols--the rules and language of communications among the machines within a computer network--for server software that allows accessing files, printing and logging in.

But Microsoft argued that in reality it would have to give up more information than protocols, infringing its rights.

"The Commission calls for functional equivalence," Microsoft lawyer Ian Forrester said, referring to the level of smoothness that software needs to work well with Windows. "In order to achieve that, you have to go far beyond interoperability."

Critics of Microsoft argued not only that protocols were enough but by not providing them Microsoft stalled innovation in the market.

The founder of the Samba Team, creators of open-source server software, showed the court a paperback-size storage server, which he said can be turned into a work-group server with the aid of the information.

Once it gives over the protocols, "Microsoft no longer has a stranglehold over the world's networks," said Andrew Tridgell, whose group took years to create print and file server software that works with Windows.

A ruling in favor of Microsoft will allow it to pursue the business practices that have helped it to become a household name around the world. But if the court upholds the decision it could spur the Commission to act again against the company.

After scores of wildly excited comments on Slashdot link here (which led me to the story), somebody notes that the Microsoft stock is up 1.5 points today. I guess the NYSE is not too worried about the EU Commission or the Court.

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