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October 22, 2007

Microsoft throws in the towel in EU antitrust fight

Posted by David Hunter at 9:53 AM ET.

After the pummeling Microsoft took last month from the EU Court of First Instance, the big question was whether Microsoft would go another round in their European antitrust battle. That question was answered today when Microsoft decided to throw in the towel and not appeal:

Microsoft agreed to obey key parts of a 2004 antitrust ruling upheld by an appeals court last month, EU regulators said Monday, cutting royalties for rivals and handing information over to open source developers.

EU Competition Commissioner Neelie Kroes reached the deal in a phone call with Microsoft CEO Steve Ballmer in the early hours of the morning, she said, adding that she hoped this “dark chapter” was over.

“As of today, the major issues concerning compliance have been resolved,” Kroes said, but cautioned that Microsoft has ongoing obligations.

Microsoft has agreed to three substantial changes, according to the European Commission.

The company will now charge a one-time fee of $14,310 (€10,000) for companies that want “complete and accurate” technical information to help them make software compatible with Microsoft’s Windows desktop operating system.

It will also allow that data to go to open source companies such as Linux, and will cut the price it charges for worldwide licenses – including patents – to less than 7 percent of what Microsoft originally claimed.

“The agreements will be enforceable before the High Court in London, and will provide for effective remedies, including damages, for third-party developers in the event that Microsoft breaches those agreements,” the Commission said.

I assume we’ll get to see the full details of the settlement, but the basics are clear: Microsoft executives finally made the problem go away, a course I had been suggesting for quite a while.

Update: Maybe we won’t get the details beyond what is leaked:

Under a deal reached after negotiations over a recent dinner between Ms. Kroes, and Microsoft chief executive Steve Ballmer, Microsoft agreed to slash the cost it was charging to license the so-called “interoperability information” needed to make software work well with Windows. The EU in return stopped the clock on record fines against Microsoft, which were accruing at €3 million per day.

A Microsoft spokesman said the company wouldn’t comment beyond a brief statement in which it said it would “continue to work closely with the Commission and the industry to ensure a flourishing and competitive environment for information technology.”

Minor issues remain. Chief among them: How much will Microsoft have to pay the EU in fines. Beyond the €497 million, an additional levy of €281 million remains in escrow; Microsoft had appealed that fine. A spokesman said he couldn’t immediately say whether the company would withdraw that appeal.

The clock has stopped on the three-million-euros-a-day fine, but the EU hasn’t yet determined how much of that to impose. The figure could theoretically be well more than one billion euros. The EU hasn’t yet determined how much of the variable fine to assess, and it isn’t clear whether Microsoft will challenge that figure once it is determined.

A billion euros here, a billion euros there – sooner or later you’re talking more than a minor issue.

Update: Microsoft’s formal statement.

Update 10/24: Another Microsoft statement related to the discontinuance of the court cases.

Filed under Antitrust, Executives, General Business, Governmental Relations, Legal, Microsoft, Steve Ballmer

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One Response to “Microsoft throws in the towel in EU antitrust fight”

  1. Sources say Microsoft nearly won EU antitrust appeal | Microsoft News Tracker Says:

    [...] Microsoft’s legal team carefully assessed their chances of prevailing in a further appeal before throwing in the towel. The close vote may indicate that EU courts aren’t a rubber stamp for commission decisions. [...]

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