Microsoft finally bows to EU antitrust measures

[Ashfaq]

Microsoft ended three years of resistance Monday and finally agreed to comply with a landmark 2004 antitrust decision by the European Commission.

The defeated software giant announced it would not appeal against a decisive European Union court ruling two months ago that backed the Commission.

"The repercussions of these changes will start now and will continue for years to come," Competition Commissioner Neelie Kroes told a news conference, adding that Microsoft's agreement will have "profound effects" on the software industry.

"It is a victory for the consumer", she said.

Microsoft, which was fined nearly half a million euros in 2004 and a further 280.5 million euros ($400.6 million) in 2006 for non-compliance, faced the prospect of steep new fines if it did not accommodate the Commission.

"As from today Microsoft has established compliance, no doubt about that," Kroes said. "There is no reason to impose further penalties on Microsoft as of this day."

But she left open the possibility it could yet face fines for its lack of compliance between 2006 and now.

Among other reversals, Microsoft will make available to so-called "open source" software developers information they need to make their programs work smoothly with Microsoft's Windows operating system for personal computers.

Microsoft has also sliced high royalties for that interoperability information, the Commission said.

Microsoft suffered a major defeat in September when the Court of First Instance in Luxembourg, the EU's number two court, upheld the 2004 ruling that the world's largest software maker abused its dominant market position to crush rivals.

It backed the Commission on all major points.

Among other things, the court upheld the Commission's finding that Microsoft failed to give rivals enough information so their work group server software would work as smoothly with Microsoft's desktop computers as Microsoft's own software.

Work group server software is used in small office groups for signing on, file management and printing.

The Commission said Microsoft had made substantial changes to its royalty program in three ways.

First, open source software developers will be able to access and use the interoperability information. Microsoft will not assert patents against non-commercial open source software development projects.

Second, the royalties payable for this information will be reduced to a nominal one-off payment of 10,000 euros.

Third, the royalties for a worldwide license including patents will be reduced from 5.95 percent to 0.4 percent, far less than the 7 percent originally demanded by Microsoft.

Any disagreements will be settled in London's High Court.

Beyond that, Kroes said the company must comply with the decision, including for new software.

Microsoft's new stance was signalled earlier this month, when the company withdrew from an appeal against a South Korean antitrust ruling. It had appealed to the Seoul High Court.

Kroes personally negotiated with Microsoft President Steve Ballmer in a number of conversations including over a meal at a restaurant near her home town of Rotterdam, in the Netherlands, she said.