Microsoft Ponders Questions Unanswered by EU Court

By Peter Galli  |  Posted 2007-09-17 Print this article Print

Communication protocol pricing and how to protect Microsoft's trade secrets are issues that remain to be resolved.

Although the European Court of First Instance has upheld most of the findings of the European Commission antitrust case against Microsoft, the legal issues are far from resolved, as that decision raises as many questions as it answers. "There are a number of things that are not spelled out explicitly in the decision itself. I am hopeful that we can have the kind of conversation that will enable us to know with confidence what we must do and what we can do in other areas, and I am hopeful that we can do that very quickly," Brad Smith, general counsel for Microsoft, based in Redmond, Wash., said on Sept. 17. In its ruling issued Sept. 17, the court agreed that Microsoft had abused its dominant position by refusing to make its products interoperable with those of its rivals and by tying Windows Media Player to the Windows operating system.
The full ruling can be found here, in PDF form.
One of the biggest issues to be resolved is the pricing of Microsofts communication protocols, which the European Commission earlier in 2007 said were too high, Smith said. Click here to read more about why the EU court struck down Microsofts appeal. In response, Microsoft did drop the price for protocols that are incorporated into products distributed in Europe to 1 percent of the revenue generated from the product, but it remains unclear whether that is an acceptable price to the Commission, he said. "If the Commission feels that our prices are still too high, we will, of course, want to understand that very quickly so that we can address it … if the price is still too high, it will be very important for us to understand what price is low enough, so that we can conform to all of our obligations," he said. While Smith acknowledged that the prices needed to be reasonable and offered on a nondiscriminatory basis, he noted, "The decision itself did not specify that the only reasonable price was zero. Our goal is to be in complete compliance with this decision. We will look to the Commission, among others, for guidance." But, while Microsoft wanted to do the right thing, Smith said, he was not "necessarily here to urge us and other large companies in our industry to all sign up to the proposition that innovative technology should be free simply because it may be relevant to interoperability," he said. Microsoft has also argued vociferously that those protocols contain its intellectual property as well as trade secrets. This is another issue that it wants to discuss with the Commission. "The protection of trade secrets in the way our protocols are implemented in other peoples source code is something that also may need to be sorted out, again, if possible, as quickly as we can," Smith said. Microsofts rivals have applauded the courts ruling. Click here to read more. Given that the current case has been going on for more than seven years, Smith said Microsoft did not want to have continued arguments or disputes about all of the outstanding issues and questions. "We want to move forward, in compliance with the 2004 decision." He also acknowledged that the Commission was investigating another complaint against the company, from a group representing IBM and others that wanted Microsoft to license additional communications protocols relating to its SharePoint and Exchange servers, as well as some other products. "We have conveyed our willingness to license those technologies. As a matter of business policy and approach to the industry, we are prepared to license to others in our industry, on reasonable and nondiscriminatory terms, the technologies that are important to interoperability," Smith said. Page 2: Microsoft Ponders Questions Unanswered by EU Court

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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