TELECOM Digest OnLine - Sorted: Microsoft Responds to Latest EU Charges

Microsoft Responds to Latest EU Charges

Raf Casert, Associated Press (
Mon, 23 Apr 2007 14:04:48 -0500

By RAF CASERT, Associated Press Writer

Microsoft responded Monday to European Union allegations that it is
overcharging rivals for information that would make their products
work better with Windows. The software maker also repeated its request
for more guidance on what regulators consider to be an acceptable

To level the software industry's playing field, EU officials want
Microsoft's rivals to have access at a "reasonable cost" to material
that would help their programs interoperate with Windows-based
servers. Regulators have called the current prices excessive and the
Microsoft's information insufficient.

The EU had given Microsoft until Monday night to come through with a
response on the fees it seeks from competitors to share computer
information, and threatened daily fines that could go as high as $4
million a day. It said it will consider the company's reply and decide
whether to impose a daily penalty.

Microsoft declined to provide details about the company's response.

Microsoft previously said the prices it charges are fair and that the
EU has failed to provide clear guidance.

Also Monday, Microsoft declined the opportunity to have a hearing with
the Commission on the EU's Statement of Objections.

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

Microsoft's license program sets a maximum 5.95 percent royalty rate
for products that use its server protocols and the company has said it
believes the prices reflect the code's value. It claims the Commission
wants it to license the technology to competitors for free.

On March 1, the EU's executive arm said there was "no significant
innovation" in the requested information Microsoft had to provide
rivals -- and therefore Microsoft did not have the right to charge
high fees for licenses.

Microsoft has complained that the treatment it receives from the
27-nation EU is unmatched around the world and hurt Europe's efforts
to become a thriving high-tech economy.

In a landmark 2004 ruling, EU regulators found the company broke
competition laws and abused its dominant market position.

Besides a record $674 million fine it imposed at the time of the ruling,
the EU levied a $380 million fine last summer, saying Microsoft did not
supply -- as demanded -- complete interoperability documentation.

In the meantime, Microsoft has reached licensing agreements with
several of the companies that originally took issue with the software
maker's practices and pricing, including Sun Microsystems Inc. and
Novell Inc.

Microsoft has appealed the original 2004 ruling and a court decision
is expected by September.

Shares of Microsoft fell 30 cents $28.72 in Monday afternoon trading
on the Nasdaq Stock Market.

Copyright 2007 The Associated Press.

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