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[vox] [fwd] EU deals blow to M$ and empowers open source developers
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[vox] [fwd] EU deals blow to M$ and empowers open source developers

Seen on Schoolforge's list:

----- Forwarded message from dhhoward -----

Date: Mon, 22 Oct 2007 15:55:28 +0000
From: dhhoward
Subject: [school-discuss] EU deals blow to M$ and empowers open source developers

Great news.  Daniel

Microsoft Bows to EU Regulators
On 2004 Antitrust Measures
Software Giant Won't Appeal EU Court Ruling
October 22, 2007 11:28 a.m.

BRUSSELS -- Microsoft Corp. threw in the towel on its nine-year antitrust fight with European Union regulators, saying it won't appeal a court judgment handed down last month that could lead to more cases against other big global technology companies.

Microsoft also agreed Monday to slash royalty charges on licenses that EU regulators had forced the company to supply so that competitors could link their products effectively to Microsoft's ubiquitous Windows operating systems.

The Redmond, Wash., software giant's decision not to appeal, announced in a press release this morning, makes the EU's tough stance on monopoly abuses settled law. It also confirms the EU's power to compel a dominant company to share its intellectual property with competitors.

The Court of First Instance, Europe's second-highest tribunal, outlined that authority in judgment in September. The court's ruling in Europe's most significant monopoly case in years had been eagerly awaited as a guide to the boundaries of the EU's antitrust power. When the court spoke, it delivered a clear message: That power is broad.

The court held that antitrust regulators were correct to condemn Microsoft for holding back technical information that would allow competitors' products to work with machines running Windows, and for bundling a media player inside its operating system.

Legal experts said the judgment came down so firmly against Microsoft that the company had little room to mount an appeal. Instead, Microsoft sought a deal.

Microsoft CEO Steve Ballmer and EU Competition Commissioner Neelie Kroes brokered one over dinner in a small restaurant in Mrs. Kroes's home country of the Netherlands, according to Ms. Kroes. (Read the full text of Ms. Kroes's statement.)

Under the agreement, Microsoft will license all of its intellectual property, except patents, necessary for competitors to work with a version of Windows used on business servers. Competitors will now pay only a one-time fee for the license of 10,000 euros, rather than royalties. If they believe they need to license patents from Microsoft, Microsoft is required to do so at the rate of 0.4% of the competitors' revenue from the product, well below the 5.95% rate originally suggested by Microsoft.

Mrs. Kroes, for her part, stopped the clock on daily fines of up to €3 million per day against Microsoft and declared the U.S. software giant was – at least for now -- in Europe's good graces. "As of today, the major issues concerning compliance have been resolved," she said.

Before the court's ruling, Microsoft had resisted granting licenses—arguing that the EU didn't have the authority to force the company to do so, and disputing what the licenses would cover and how much they should cost. Microsoft resisted selling licenses to open-source developers at any price, arguing that would unveil the company's secrets. In open-source software, the code that underlies a program is bared publicly

The deal announced Monday permits purveyors of open-source software, among Microsoft's most ardent opponents and strongest competitors in the server-software segment, to license the interoperability information.

Minor issues remain. Chief among them: How much will Microsoft have to pay? The EU has heaped fines on the company, including two fixed levies and a variable, daily fine of up to three million euros a day. It has risen past one billion euros, though Mrs. Kroes said that clock has stopped ticking as of today. 

One of the fixed fines, of €497 million ($705 million), was upheld by the court judgment. The decision not to appeal means that the money, held in an escrow account, will now be released to the EU. Microsoft had appealed the imposition of the second fixed fine, of €281 million. A spokesman for the company said he didn't immediately know whether Microsoft would withdraw that appeal.

The EU hasn't yet determined how much of the variable fine to assess, and it isn't clear whether Microsoft will challenge that figure once it is determined. Microsoft could end up paying more than one billion euros.

Also on the horizon are other complaints raised by competitors, including one from a consortium backed by International Business Machines Corp. that challenges the dominance of Microsoft's Office software. Mrs. Kroes didn't indicate how the EU would address those complaints. 

She did say that Microsoft had an "ongoing obligation" to disclose interoperability information to competitors that asked for it. That will continue as Microsoft makes new versions of products, she said. 


----- End forwarded message -----

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