Microsoft Asks U.S. to Intervene in Europe

The software giant wants help from the federal government in the trade secrets aspect of its antitrust case with the European Union.

Microsoft has asked the U.S. government and the Department of Justice to intervene on its behalf in the software companys ongoing European Union antitrust case.

Microsoft confirmed to eWEEK that it has asked the U.S. government to take action on an aspect of the case specifically involving trade secrets, arguing that the case could have a huge impact on any U.S. company relying on trade secrets.

Microsoft also sent a memo to several companies asking them to support its request, and including contact information for a Department of Justice official and a special advisor to the White House, according to a report earlier this week in the Financial Times.

The memo states, in part: "I understand that Microsoft has asked the U.S. government to intervene directly in the trade secrets case, and I wanted you to know that our company supports that request," according to the FT. Companies are urged to support the claim that "the European Commissions trade secrets decision will establish a precedent that could adversely impact the value of trade secrets, which are substantial business assets for many U.S. companies, including mine."

The Commission last year found that Microsoft had abused its dominant market position in PC desktop operating systems to extend its influence in server software. Microsoft was fined a record 497 million euros and was forced to make several key changes to its business practices.

/zimages/3/28571.gifThe European Union has hired a criminologist to help it monitor Microsoft. Click here to read more.

One of these changes, the requirement to license desktop communications protocols to rivals, has proven to be a sticking point between Microsoft and the Commission. Microsofts open-source competitors have argued that the software giants proposal on the matter effectively locked them out.

Microsoft argues that to go any further would mean revealing sensitive trade secrets, while open-source organizations such as the FSFE (Free Software Foundation Europe) and the Samba project say the information is only valuable because it prevents full competition.

The Commission agreed to allow the courts to decide the question, and in August Microsoft filed an appeal specifically on the trade-secrets issue. It is this appeal that is the focus of Microsofts new lobbying efforts.

"In recent years, the European Commission and EU member state governments have intervened in a number of competition cases and appeals in the United States. It makes sense for the U.S. government to offer its views in a similar way under the procedures established by European courts, where the issue has broad implications for the global economy," a Microsoft spokesman told eWEEK.

If the United States decides to act, it could conceivably become an "intervener" in the trade secrets case, which would allow it to present arguments in court supporting Microsofts position. Such a move by a non-EU government is almost unknown, however.

It is more likely that the United States could establish regular meetings with the Commission on the trade secrets issue. The United States and the Commission already meet to discuss the Microsoft antitrust case as a whole, but not specifically its trade secrets aspect.

Carlo Piana, an attorney representing the FSFE and Samba in the ongoing case, said he wasnt surprised by Microsofts lobbying efforts. "Lobbying is an open and legitimate process in the USA, and its no surprise that Microsoft uses any leverage it has," he said.

He said the court itself was unlikely to see any direct pressure, while the Commission would probably not make any changes due to lobbying. "I dont think that twisting arms to this effect will do very much for them," he said.

Piana noted that there are plenty of companies with large intellectual property portfolios that support the Commissions side of the case. "This is no USA vs. Europe battle, this is freedom of enterprise against a monopoly," he said.

In its own Microsoft antitrust case, the U.S. DOJ at first called for Microsofts breakup, but in the fall of 2001 agreed to a far more lenient settlement. The settlement didnt state that Microsoft illegally maintained a monopoly in Intel-based operating systems and didnt keep Microsoft from using bundling to extend its market power and Internet influence.

The Commission has attempted to impose more effective remedies, but so far the protocol licensing requirement is the only one seen by open-source rivals as potentially making a significant difference to the market. A ruling on the case isnt expected for several months.

/zimages/3/28571.gifCheck out eWEEK.coms for Microsoft and Windows news, views and analysis.