Microsoft Abandons Fight to Keep Data From Rivals (Update4)
By Matthew Newman
Oct. 22 (Bloomberg) -- Microsoft Corp., the world's largest software maker, gave in to European Union demands to make information available to developers of rival programs such as Linux after more than three years of legal wrangling.
The agreement resolves a key dispute over a 2004 ruling. The Redmond, Washington-based company also said it won't appeal a Sept. 17 court ruling upholding the EU decision.
``These changes in Microsoft's practices will profoundly affect software industries,'' European Competition Commissioner Neelie Kroes told reporters in Brussels today. ``I sincerely hope that we can just close this dark chapter of our relationship.''
Today's accord is part of Microsoft's efforts to resolve legal disputes with regulators in the U.S., Europe and Asia. The company last week dropped its appeal of an antitrust decision in South Korea. It's also seeking to end five years of U.S. court supervision for illegally protecting its near-monopoly on personal computer software. The company's Windows operating system powers more than 90 percent of the world's PCs.
The EU is still considering fining Microsoft for its past failure to disclose information to competitors including developers of so-called open-source software, Kroes said. Regulators are also probing complaints related to Vista, the latest version of Windows, and Microsoft Office.
Microsoft shares rose 46 cents, or 1.5 percent, to $30.63 as of 10:16 a.m. in Nasdaq Stock Market trading in New York. The stock has gained 2.6 percent so far this year.
Cut in Royalties
The European Commission, the EU's antitrust authority in Brussels, said Microsoft offered to license information to open- source rivals on how Windows communicates over a network for a one-time payment of 10,000 euros ($14,000). It will also reduce the royalties on related patents to 0.4 percent from 5.95 percent, the commission said.
``The measures that the commission has insisted upon will benefit computer users by bringing competition and innovation back to the server market,'' Kroes said in a statement today. ``I have always said that open source software developers must be able to take advantage of this remedy: now they can.''
Under the 2004 decision, Microsoft had to pay a record 497 million-euro fine, disclose network data to rivals and sell a version of Windows without a built-in video and audio player.
Microsoft will continue working closely with the EU regulator and industry to ensure a ``competitive environment for information technology in Europe and around the world,'' the company said in an e-mailed statement.
Free Source
In the past, Microsoft has refused to license its technology to open-source software makers. Programs such as the free operating system Linux and a file and printing system called Samba are distributed under terms requiring access to the source code, or underlying operating instructions.
Carlo Piana, a lawyer for the Free Software Foundation Europe, which represents open-source developers, said the agreement may give free software makers access to the so-called protocol information.
``As soon as we've read the agreement, we'll have a final view,'' Piana said in a telephone interview.
`Ongoing Obligation'
The regulator won't appeal the trustee aspect of the ruling, commission spokesman Jonathan Todd said today. The EU's second- highest court in September said Microsoft shouldn't have to pay the cost of the trustee to monitor its compliance.
On March 1 this year, the commission threatened the company with millions of euros in daily fines backdated to December 2005 for charging ``unreasonable'' fees for licensing the protocols.
In today's statement, the commission said there is ``no reason to impose further penalties on Microsoft.''
Microsoft has an ``ongoing obligation'' to update the information as its products evolve, the commission said. Failure to do so could result in daily penalties, it said.
In July 2006, the EU also imposed a 280.5 million-euro penalty against the software company for failing to license information to rivals. It was the first time that the EU had fined a company for failing to comply with an antitrust order.