EUs Hands May Be Tied in Microsoft Case

By Matthew Broersma  |  Posted 2005-06-02

EUs Hands May Be Tied in Microsoft Case

European regulators may be powerless to give open-source competitors effective access to Microsofts server protocols, despite antitrust rulings against the company and the EUs ability to impose massive new fines.

The European Commission has said a proposal submitted by Microsoft Corp. this week on implementing EU antitrust sanctions is the companys last chance to avoid new fines, which could amount to 5 percent of Microsofts daily global sales.

The Commission ruled a year ago that Microsoft must offer a version of Windows without a bundled media player, and must allow competitors to license server communications protocols.

While the issues around unbundled Windows are understood to have been resolved, Microsofts plan for licensing the server protocols has been repeatedly found wanting, and negotiations have dragged on for months.

A core sticking point is the licenses per-seat fees, which make them useless for open-source projects, according to open-source developers.

But where it comes to these crucial licenses, the Commissions hands may be tied. "If the Commission requires Microsoft to make its protocol licensing GPL [General Public License]-compatible, it could jeopardize their entire case," said Jonathan Zuck, president of ACT (the Association for Competitive Technology), which supports Microsofts side of the case.

Click here to read more about Microsofts antitrust compliance controversy.

Earlier this year the European Unions CFI (Court of First Instance) ruled that Microsoft must implement the Commissions sanctions right away, without waiting for the outcome of a broader appeal of the case, which could take years. However, the Commission cant force Microsoft to give away its intellectual property.

"Any refusal by the Commission to allow adequate protection of Microsofts intellectual property could constitute a new fact that would allow Microsoft to submit a new request for suspension of its sanctions," said Zuck. "If the European Commission refuses to allow Microsoft to adequately protect its intellectual property, it will provide Microsoft with a strong case for suspending these sanctions until appeal."

The legal team on the other side agreed this is a possibility. "If Microsoft believes the measures imposed by the Commission are causing real damage and theres a need for urgency, they can appeal before a judge," said Carlo Piana, a partner with Tamos Piana & Partners, which represents the FSF (Free Software Foundation) Europe in the case.

Read more here about the FSF Europes involvement with the Microsoft antitrust issue.

Pernicious protocols

A central issue in the case so far has been whether Microsofts server protocols constitute intellectual property that the company should be allowed to keep secret.

While the CFI ruled that Microsoft must offer particular protocols to competitors under reasonable and non-discriminatory terms, as called for in the Commissions antitrust remedies, the matter of how important the protocols are and how much protection they deserve has not been fully resolved, according to those on both sides of the debate.

That means it is unclear how far the Commission can go without triggering an appeal that would, at the least, mean yet another delay.

Microsofts supporters argue that the protocols are of no use for true competition. "The only reason competitors would want internal protocols like these, the kind Active Directory uses to talk to itself, is to create a clone of existing technology," said Zuck. "These white box drop-in replacements for Windows servers do not represent real innovation or competition on the merits."

Next Page: What open-source developers need from Microsoft.

What Open

-Source Developers Need from Microsoft">

The developers of Windows-compatible networking technology such as Samba beg to differ.

The server-to-server protocols are needed even for basic file and print servers, because these need to be able to communicate with Active Directory, said Volker Lendecke, a Samba consultant and member of the core Samba developer team.

"You definitely need that, otherwise you cant take part in normal Windows networks," he said.

"We want all the protocols, so that Windows clients and other servers fully believe we are a Windows-compatible implementation. Its the network behavior we want to clone, but the implementation behind that is different. Thats where we see that we really can compete, by making it more efficient, more secure or whatever," he said.

So far Samba has had to rely on reverse-engineering for Windows compatibility.

Far from representing real intellectual property, Microsofts protocols have no value whatever, except for locking out competitors, argue the FSF Europe and companies such as Real Networks Inc.

Locking out open source?

What sort of license would be sufficient to allow competition? Microsoft has argued that its current terms—involving per-seat fees—should be fine for open-source projects. ACT supported this view.

"It would be easy for Red Hat [Inc.] or Novell [Inc.] to include the protocols in ... their enterprise server products along with an incremental price increase to cover the license costs," ACTs Zuck said. "In fact, there should even be a way to distribute an interoperability layer as object code." That would allow open-source projects to distribute an implementation of the protocols without virtually releasing them into the public domain.

Fees would be fine, responded Sambas Lendecke—the problem is the requirement to keep track of the number of seats, something incompatible with the freely distributable nature of projects like Samba. "We have no idea who is using our stuff," he said.

And an interoperability layer sounds good, but in practice it would mean taking decades of working years to reimplement a proprietary version of Samba that included the protocols. "It goes so deep into the operating system that its not practical, nobodys going to do it," Lendecke said.

The only way to ensure compatibility with open-source projects is a different license, he said: "If the EU accepts per-seat licensing terms, this explicitly excludes open-source software." Proprietary competitors would probably not have a problem with the licenses, he said.

The Commission has said it will complete its evaluation of Microsofts proposal by the end of this month.

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