Prevarication Triumphs in EU-Microsoft Compromise

08 June 2005

In March 2004 the European Commission ruled that Microsoft had abused its virtual monopoly in PC operating systems to illegally dominate the media software market.

The commission accordingly fined the company €497 million ($609.72m; £334.85m) and ordered it to amend certain of its trading practices. For the latter, the EC set a compliance deadline of May 31 this year - failing which it would levy a $5m a day fine, eyewatering even by Microsoft's standards.

The computer titan promptly appealed to the Court of First Instance in Luxembourg. In December the court ordered the company to comply with the punishments pending the outcome of its appeal.

Meantime, the compliance deadline ticked away until the eleventh hour and fifty-ninth minute when Microsoft filed its proposals with the EC. On Monday, six days later, these were provisionally accepted by the regulatory body - subject to consultation with a number of software and hardware rivals.

Many of the latter, along with independent onlookers, see the result as a triumph for the Seattle company's legendary foot-dragging techniques, honed after more than two decades of experience in such matters. Both sides claim advantage from the outcome, although neither was crass enough use the word 'victory' (at least in public).

Microsoft's general counsel, Brad Smith, hailed the agreement as a "positive step forward" for both sides. MS will license its software codes to third parties, not only in Europe but worldwide; it will also facilitate the evaluation by rival programmers of information to determine whether they wish to license it.

Says EC antitrust commissioner Neelie Kroes: "I am happy that Microsoft has recognized certain principles which must underlie its implementation of the commission's decision. This includes the ability for developers of open-source software to take advantage of the remedy."

Under the agreement Microsoft will …

  • Offer more varied and flexible licensing terms for programming information that rivals need to write Microsoft-compatible software.

  • Allow the sale of software that incorporates its programming information worldwide, not just in Europe.

  • Peg royalty requests to market rates and not to Microsoft's near-monopoly position in PC operating systems and applications.

  • Offer some non-innovative programming information royalty-free.
The contentious issue of bundling MS' Media Player software with its Windows operating systems apparently remains suspended in mid-air.

Data sourced from Wall Street Journal Online; additional content by WARC staff