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April 5, 2007

EU to tell Microsoft that $0 is a nice round number

Posted by David Hunter at 9:33 PM ET.

Tobias Buck at the Financial Times has gotten an early look at a confidential statement of objections from the European Commission in the dispute over how much Microsoft can charge for interoperability information and apparently the Eurocrats want a price next to zero:

Microsoft will be forced to hand over to rivals what the group claims is sensitive and valuable technical information about its Windows operating system for next to no compensation, according to a confidential document seen by the Financial Times.

The group is required to license the technical information to competing groups under the terms of the European Commission’s antitrust ruling issued three years ago. Brussels hopes the order will allow rivals to design server software that runs more smoothly with Windows.

But the confidential statement of objections from the Commission in the long-running dispute makes clear that Microsoft will at best be allowed to levy a tiny fraction of the royalties it is demanding.

The Commission’s expert, who was suggested for the post by Microsoft, goes on to calculate that even an average royalty rate of 1 per cent would be unacceptable for licensees. Prof Barrett states that a 0 per cent royalty would be “better” and adds: “We can only conclude on this basis that the Microsoft-proposed royalties are prohibitively high [...] and should be reduced in line with this analysis.”

Microsoft spokesman Jack Evans says

The commission is asking us to license the technology to our competitors for free.

By George, I think he’s got it! Microsoft is scheduled to respond by April 23.

Aside from Microsoft, I’ve also seen a bit of whinging by the punditry on this topic, but the fact of the matter is that the European Commission can likely get whatever they desire unless Microsoft wants to try to get a court to overturn it. By way of a history lesson consider that back in the 80′s IBM was required by the European Commission to provide mainframe peripheral interface specifications free of charge to any and all of its competitors.

Filed under Antitrust, General Business, Governmental Relations, Legal, Microsoft

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