Microsoft faces more EU antitrust action

Microsoft is facing a possible new legal challenge in its long-running antitrust battle with the European Commission that could force it to hand over sensitive information about its Windows operating system to its rivals, largely free of charge.

The US software group is obliged to license the information to rival companies under the terms of the Commission’s landmark antitrust ruling against Microsoft of March 2004. Brussels hopes this will enable other companies to better develop server software that works smoothly with the ubiquitous Windows operating system – and so provide a boost to competition in the market.

However, according to a confidential Commission document seen by the Financial Times, the information made available by Microsoft so far is “totally useless” and falls far short of the regulator’s expectations. The December 22 “statement of objections” states in unusually blunt terms that Microsoft has failed to comply with the Commission’s antitrust ruling, raising the prospect of fresh financial penalties.

In a bid to avert this threat, Microsoft last week offered to disclose parts of the Windows source code, though its offer sparked little enthusiasm among rivals and the Commission.

According to documents annexed to the statement, Microsoft is also likely to face strong Commission opposition to the royalties it plans to demand from rival companies for access to the interoperability information.

A letter by Professor Neil Barrett, the Commission’s technical adviser in the case, states that there is nothing “innovative” about the 12,000 pages of information drawn up by Microsoft so far. Because the group is only allowed to charge rival companies for licensing information if it is “innovative”, this assessment would allow Brussels to prevent Microsoft from charging any fees at all.

While most observers believe that this is unlikely to happen, the adviser’s opinion suggests that Brussels will be in a strong position to drastically slash the fees proposed by Microsoft and, further, to demand that large parts be given away for free.

A Commission spokesman stressed on Friday that the regulator had not yet reached a conclusion on licensing fees.

Horacio Gutierrez, Microsoft’s legal counsel for Europe, said: “[Prof Barrett] made this statement without having had the benefit of seeing the significant documentation submitted by Microsoft to the Commission which substantiates the innovative nature of the technology. We are confident that an expert review of the full information would lead to a different conclusion.” Prof Barrett was appointed to the post of “monitoring trustee” last October – and was nominated by Microsoft itself.