-  Saturday 15 August 2020

Microsoft claims EU breakthrough, rivals skeptical

U.S. software giant Microsoft (MSFT.O: Quote, Profile, Research) said on Friday there had been a breakthrough in its dispute with the European Commission at a hearing on antitrust fines levied by Brussels, but rivals and critics were skeptical.

"As I said in the hearing, I believe that we have had a breakthrough," Microsoft general counsel Brad Smith told reporters after the two-day hearing into the Commission's plan to fine the company 2 million euros ($2.4 million) a day.

Europe's top competition regulator accuses Microsoft of blocking competition by withholding information on its business software, while the company says it has done more than enough to aid rivals, most of them American.

At stake in the two-day closed hearing was whether Microsoft could convince the Commission not to impose the fines for non-compliance with its original March 2004 ruling.

Participants outside the Microsoft camp said they heard nothing new in the company's defense.

"It was the same old stuff," one said. "The Commission did not indicate in any way that it backed off (from) Microsoft."

They were speaking on condition of anonymity after the EU hearing officer conducting the case ordered all parties to refrain from divulging the proceedings to the media.

A Commission spokesman said the EU executive would take time to reflect before deciding whether to proceed with the fines.

Brussels argues that Microsoft had not complied with a 2004 ruling that it had abused the dominant position of its Windows operating system to crush rival software makers.


Smith said Microsoft now had "greater clarity" on the antitrust case, helping to bring about a solution.

His upbeat comments appeared to be the result of a late night meeting between Microsoft engineers and the independent trustee appointed to the case, to discuss in detail what more Microsoft could do to satisfy the EU regulators.

The trustee and Microsoft have been in contact frequently, and supporters of the Commission said Smith's comments suggested Microsoft realized it was not yet in compliance.

Participants said the trustee, Professor Neil Barrett, had made that point at the hearing on Friday.

"He said they were not in compliance. That was the basic point he was making. It was clear as the light of day," one said.

Even if Microsoft takes further steps now, the Commission may still fine it for non-compliance backdated to December 15, the deadline it originally set, an EU spokesman said.

In March 2004, the Commission fined Microsoft almost half a billion euros for abusing a dominant market position and ordered it to share information with rivals so they could make server software that runs as smoothly with Windows as Microsoft's own.

Despite 12,000 pages of documentation that Microsoft has submitted spelling out how its software works, the Commission says rivals still do not have the right information.

Microsoft has previously said it has not only complied with the demands, but gone beyond them and is willing to do more.


The case has raised some U.S. political concern.

In a document seen by Reuters, the U.S. mission to the EU urged the Commission on Monday to treat Microsoft fairly and said the company's claims of unfair treatment, "if accurate, are of substantial concern to the United States."

Microsoft has accused the Commission of denying it access to documents it says it needs to defend itself against the fines.

But both the Commission and the U.S. government played down the significance of the letter.

An official with the Justice Department's antitrust division, Bruce McDonald, stressed that the U.S. government had not taken sides between the EU and Microsoft and only wanted them to "constructively and fairly work this out."

Microsoft was not without its supporters at the hearing.

The Association for Competitive Technology, which represents more than 3,000 information technology companies including eBay, said the Commission's demands were unreasonable.

"As a software engineer with 12 years of experience ... I know that search for perfect documentation is a search for the Holy Grail," said ACT's president, Mike Sax. "It is equally true that perfect documentation has never been necessary to create interoperable software," he said.

Microsoft has also offered parts of its vital source code for work group servers as well as 500 hours of free technical support from Microsoft engineers to software developers.


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