EU: Microsoft Now in Full Compliance

UPDATED: Microsoft is slashing its licensing fees in Europe and handing over interoperability information on server protocols to open source developers as part of its latest agreement to comply with the EU’s 2004 antitrust ruling.

The changes appear to be substantial and could impact the strategic direction of the world’s largest software company. They are the result of ongoing negotiations Microsoft has held with the commission over the terms of the 2004 antitrust ruling against Microsoft.

The decision, which was upheld last month by the Court of First Instance (CFI), requires Microsoft to provide information that enables third-party developers to develop products that interoperate with the Windows desktop operating system.

“Microsoft has previously offered to license this information to developers on terms that the commission thought wholly unreasonable,” the commission said.

In remarks today to explain the latest agreement with Microsoft, Neelie Kroes, the European Commissioner for Competition Policy, said “Microsoft has finally agreed to comply with its obligations under the 2004 Commission decision.”

Kroes said she has been in almost daily contact with Steve Ballmer over the last two or three weeks. “As a result of final contacts that took place early this morning, I am now in a position to present to you the results of those highly constructive conversations.

“I told Microsoft that the royalties for access to its secret interoperability information were unreasonable and had to be reduced,” she said in her statement. “Microsoft has now abandoned its demand for a royalty of 2.98 percent of revenues from software developed using licensed information.”

Instead, she said, the percentage royalty has become a nominal, one-off payment of €10 000 [$14,167.50]. “In response, Microsoft has slashed its requested royalties for a worldwide license, including patents from 5.95 percent to 0.4 percent — less than 7 percent of the royalty originally claimed.”

“At the time the Court of First Instance issued its judgment in September,
Microsoft committed to taking any further steps necessary to achieve full
compliance with the commission’s decision,” Jack Evans with Microsoft’s legal and policy issues department, said in a statement e-mailed to InternetNews.com. “We have undertaken a
constructive discussion with the commission and have now agreed on those
additional steps.”

Regarding the interoperability information available to open source developers, Microsoft is expected to do with “licensing terms that allow every recipient of the resulting software to copy, modify and redistribute it in accordance with the open source business model.”

In addition, she said she “told Microsoft that it should give legal security to programmers who help to develop open source software and confine its patent disputes to commercial software distributors and end users. Microsoft will now pledge to do so.”

Kroes said the changes in Microsoft’s business practices — especially those regarding open source software development — will profoundly affect the software industry.

Microsoft agrees with that sentiment. “We will not appeal the CFI’s decision to the European
Court of Justice,” Evans wrote, “and will continue to work closely with the commission and
the industry to ensure a flourishing and competitive environment for
information technology in Europe and around the world.”