April 23, 2007 9:56 AM PDT

Microsoft asks EC for more details on licensing fees

Microsoft responded Monday to the European Commission's objections over licensing fees for a technology to aid interoperability, saying it seeks more clarity from the antitrust regulatory arm.

The software giant, in response to the Commission's statement of objections over pricing for licensing its Work Group Server protocol technology, said it will waive its right to a hearing on the matter and continue discussions with the antitrust agency.

"We need greater clarity on what prices the Commission wants us to charge, and we believe that is more likely to come from a constructive conversation than from a formal hearing," Brad Smith, Microsoft general counsel, said in a statement.

The issue centers on whether Microsoft is providing its Windows Server protocol technology under "reasonable and nondiscriminatory" terms.

A monitoring trustee hired by the Commission is recommending royalty payments of zero to 1 percent for the licenses, whereas Microsoft wants to charge 5.95 percent, according to a report in the Financial Times.

The Commission will review Microsoft's response and will ultimately make a formal decision on whether the company is adhering to its historic March 2004 order and whether to impose daily fines if needed, according to the Commission's statement.

Competitors, meanwhile, find Microsoft's 5.95 percent royalty too steep to make it feasible to use the software giant's technology to make their products interoperable with Microsoft's products.

"The Commission's preliminary conclusion is entirely correct: the licenses would provide no value to licensees other than that flowing from the ability to interoperate with Microsoft's dominant products, and that is something for which the (decision) does not allow Microsoft to charge licensees," Thomas Vinje, counsel to the European Committee for Interoperable Systems, said in an e-mail interview.

He added that protocol specifications designed to aid interoperability are typically licensed royalty-free in the software industry.

"It would be ironic for Microsoft to be allowed to charge for something in the context of an antitrust remedy that its competitors typically give away for free," Vinje said.

At an antitrust conference in Washington, D.C., on Friday, Neelie Kroes, who heads the European Commission, talked about lessons her agency has learned in dealing with Microsoft and remedies for companies that refuse to supply information.

The European Commissioner for Competition noted that companies may not always find it in their best interest to comply with a clear, positive behavioral remedy. As a result, the Commission needs to be ready and have resources lined up to enforce remedies to their full compliance, Kroes said. Also, the Commission may need to seek alternative and more effective remedies, she said during a panel at the American Bar Association's antitrust conference.

"We need to consider under which circumstances structural remedies would be more appropriate, or even necessary, to remedy certain competition problems," according to a recap of Kroes' comments by the Commission. "For example, there could be a situation in which a dominant company has repeatedly abused its dominant position, or where it has consistently failed to comply with a behavioral remedy despite repeated enforcement action."

She added that in such cases it would be reasonable to draw the conclusion that behavioral remedies are ineffective and that a structural remedy is warranted.

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27 comments

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Why....
... should those in a certain region of the world (the EU) wish to take it upon themselves to attempt to regulate the "world's software industry market place" when they themselves are not projected to be "a source of technological innovation" according to this recent CNET NEWS article:

<a class="jive-link-external" href="http://news.cbsi.com/Gates+Asia+to+spawn+tech+breakthroughs/2100-1008_3-6178194.html" target="_newWindow">http://news.cbsi.com/Gates+Asia+to+spawn+tech+breakthroughs/2100-1008_3-6178194.html</a>

Why place economic obstacles in the path of an "come-from-behind" western hemispheric based company that was itself not the innovator of its leadership held "Work Group Server protocol technology". If ASIA is poised to "become a source of technological innovation" then why not let the industry regulate itself without "socialist" political intervention.
Posted by Commander_Spock (3123 comments )
Reply Link Flag
Pot? Meet Kettle...
The United States, in all fairness, tends to police the world on affairs that do not concern it.

I should know - I live in the U.S., as do most others who read this 'fine news source.'

So it stands to reason that if the EC wants their software a certain way, MS, if it wants Europe's business, will bow down, get on its knees, and do the same thing to a government body that it normally has a government body doing to it.

Besides, MS knows exactly what the EC is asking for. They're just stalling to make this drag on in the hopes the EC will eventually lose interest.
Posted by `WarpKat (275 comments )
Link Flag
Countries Like The USA, Brazil....
... are coming up with innovative ways of using ETHANOL as an alternative to imported petroleum products in order to to sustain their countries economy; so, in the same way SAMBA is an alternative to the Microsoft's "Work Group Server protocol technology"; or, is it that those in the EU and others have not heard about the "OS/2, LINUX and SAMBA FOLKS"!

"What is Samba?":

<a class="jive-link-external" href="http://us1.samba.org/samba/what_is_samba.html" target="_newWindow">http://us1.samba.org/samba/what_is_samba.html</a>
Posted by Commander_Spock (3123 comments )
Reply Link Flag
Commander_Spock is a Talkbot
A Talkbot from the days when OS2 existed.
Posted by t8 (3716 comments )
Link Flag
More BS from the EC
The auto industry here is getting killed by the auto industry there. Why don't we retaliate for their anti-competitive behavior? Didn't they sign the same trade agreement we signed? This is nothing more than anti-American/anti-capitalist wealth redistribution. If it was up to me, we'd stop all trade with anyone who engages in these practices. They are fining a company for selling a product that their own people FREELY bought!!
Posted by suyts (824 comments )
Reply Link Flag
How about the US position on NAFTA ?
The USA, Canada and Mexico entered into the NAFTA agreement but the United States refused to adhere to the agreement regarding softwood lumber they had with Canada. This went to court, the US lost, they appealed and lost again. Now just exactly what are you trying to say ? This may come to you as a shock but the United States has a big problem respecting any decisions regardless of who or where they come from. How about United Nations refusing to support the United States proclamation of Iraq having weapons of mass destruction. Even the US investigators couldn't substantiate this claim. Now in my opinion the US has little ground to stand on when it comes to deciding on what's fair. Good thing this decision is not one that is up to Microsoft but then Microsoft is alway free to leave and take their software with them.
Posted by intrepi (67 comments )
Link Flag
And....
... the TRUTH shall make thee free as in FREEDOM--TO BOLDLY GO!

COMMANDER'S LOG: FEDERATION STAR FLEET!

LIVE LONG AND PROSPER!
Posted by Commander_Spock (3123 comments )
Link Flag
More BS from the USA
So the EC is standing up for its people against anti-competitive US
behaviour. Good for them.

When will these people ever get it into their heads that the USA
does not rule the world. MS is subject to EC laws when it trades in
the EC.

Get used to it or take your anti-competitive activities elsewhere.
Posted by Newspeak finder (79 comments )
Link Flag
wow
Automakers from around the world, not just in Europe are eating American car manufacturer lunch for one simple reason: American cars suck!

Totally different then the PC market where MS produces the sucky merchandise but became dominant through illegal and unethical business practices.
Posted by MSSlayer (1074 comments )
Link Flag
depends how you define lost
the US lost as far as the nafta court was concerned but the internation trade commission sided with the US on the softwood lumber issue
sadly the nafta court (setup by the nafta aggreement ) held president
Posted by darkr (97 comments )
Reply Link Flag
 

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