E.U. Competition Commissioner Calls Microsoft Tactics ‘Unacceptable’

Neelie Kroes, European competition commissioner, criticized Microsoft in comments to European parliamentarians Thursday, calling the company’s continued gain of market share using outlawed tactics “unacceptable.”

Microsoft still hasn’t complied with the main demand imposed by the European antitrust ruling in 2004: that the company share interoperability information inside Windows at a reasonable price to allow rival makers of workgroup servers to build products that work properly with PCs running Windows.

Kroes told the parliamentarians that Microsoft’s market share in the server operating systems sector has continued to rise since the 2004 antitrust ruling. When the commission began its antitrust investigation in 1999, Microsoft held between 35 percent and 40 percent market share. By 2004 it rose to about 60 percent, and now it stands at between 70 percent and 75 percent.

Withholding the interoperability information is an illegal competitive tactic, the commission said in 2004. Offices full of PCs running Windows are easier to connect together using Microsoft’s workgroup server than they are with the server of a rival such as Sun Microsystems.

This unfair advantage would eventually result in Microsoft taking over the workgroup server market, the commission predicted at the time of the ruling. The latest server market share figures appear to confirm that analysis.

Microsoft has repeatedly promised to comply with the 2004 ruling, even though it has appealed the decision to the European Court of First Instance in Luxembourg.

The software vendor has submitted documents on several occasions, but so far its submissions have been deemed incomplete by the commission and an independent expert, picked by Microsoft and the commission to oversee the company’s compliance with the 2004 ruling.

Last July the commission fined Microsoft 280.5 million euros (US$373.5 million) for failing to provide the interoperability information. This was in addition to the 497 million-euro fine that accompanied the 2004 ruling.

At the beginning of this month, the commission threatened even more fines, accusing Microsoft of continuing to flout the ruling by failing to offer the necessary interoperability information “on reasonable and non-discriminatory terms.”

Microsoft claims the prices for access to the interoperability information are justified because the information comes from its own innovative work and much of it is protected by patents.

However, the commission said nearly all the information submitted is old, and much of it is available royalty-free from other software vendors.

Microsoft has until July to reply to the latest charges. In addition to a written response, the company is entitled to an oral hearing with the commission and third parties in the case.

Meanwhile, the Court of First Instance is expected to rule on Microsoft’s appeal of the 2004 decision by the end of this year, Kroes told members of the European Parliament Thursday.

— By Paul Meller, IDG News Service (Brussels Bureau)

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