Microsoft, EU at Odds over Antitrust Compliance

The EU says it's losing patience with Microsoft over its failure to fully comply with antitrust remedies, but Microsoft contends that it has made much progress on that front.

The European Commission is running out of patience with Microsoft Corp. over its lack of full compliance with antitrust remedies meted out a year ago, the Commission said on Wednesday.

European Union Competition Commissioner Neelie Kroes, the successor to Mario Monti, met with Microsoft CEO Steve Ballmer on Tuesday to discuss the remedies, but didnt arrive at any fresh agreement, the Commission and Microsoft said. Many of the outstanding issues around compliance have now been resolved, but those remaining are key to the effectiveness of the remedies, say some of the competitors intended to benefit.

More than a year has passed since the Commission originally imposed the remedies, and "we are still not satisfied," Commission spokesperson Jonathan Todd told journalists. He said the Commissions patience could wear out in "weeks rather than months."

Kroes told Ballmer that the Commission expects the remedies to be carried out "urgently and in full," Todd said. If they are not, the Commission will be "obliged to take formal steps to ensure compliance."

The Commission has the power to levy fines of up to 5 percent of Microsofts daily revenues for every day Microsoft fails to comply, but Todd said this is still only a theoretical possibility. The Commission, the executive arm of the EU, fined Microsoft a record 497 million euros ($642 million) in March of last year for abusing its Windows monopoly to gain market share in servers and eliminate media-player competition.

Microsoft spokesperson Tom Brookes told Ziff Davis Internet that the meeting between Ballmer and Kroes was "part of the ongoing dialogue between the company and the Commission," complementing daily talks between the two sides. Ballmer met Mario Monti, the previous Competition Commissioner, on many occasions, but had never met Kroes, Brookes said.

Microsoft pointed out that much progress has been made on complying with the remedies—issues with the appointment of a trustee to oversee compliance have been resolved, for instance, although a trustee has not yet been found. Microsoft and the Commission have also agreed on a name for the version of Windows without Windows Media Player, calling it Windows XP N.

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Even on the issue of licensing Windows protocols, 20 out of 26 outstanding issues were resolved as of the companys last formal proposal to the Commission on the matter at the end of March, Microsoft officials said.

However, one of the six unresolved issues is how Microsoft will license its Windows desktop protocols for use with open-source projects. The currently proposed licenses charge fees of up to several hundred euros per server and dont allow distribution of products using the protocols in source-code form.

The terms exclude competitors that use open-source licenses, such as the widespread Samba networking technology, say open-source advocates.

The Free Software Foundation Europe said the licensing issue, unlike some of the other remedies, could have a real impact on competition. "The matter is very complicated, as it could change the market in the next two or three years, said attorney Carlo Piana of Tamos Piana & Partners, which represents the FSF Europe. "Unfortunately, these negotiations seem likely to go on much longer than the deadline imposed by the Commission."

Microsoft confirmed that the licensing question is still a sticking point, and said it is still working with the Commission on the issue. "It is possible to find a way of working with open-source business models, Microsoft feels," Brookes said.

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