Experimental feature

Listen to this article

Experimental feature

Technology groups have attacked Microsoft for demanding excessive licensing fees from companies that wish to make their products work more smoothly with computers and servers driven by Windows, the US software group's operating system.

In an antitrust ruling by the European Commission last year, Microsoft was forced to license sensitive information about Windows to its rivals. The regulator hoped that by forcing Microsoft to disclose a string of so-called communication protocols, it would enable rival companies better to compete.

However, opponents of the group now say Microsoft's proposed terms are unfair, claiming they would have to pay Microsoft up to 8.5 per cent of the revenues they make on the products they developed.

Thomas Vinje, a Brussels-based lawyer for Clifford Chance who represents a business association that includes IBM, Nokia and Oracle, said the royalties demanded by the group were untenable. He said they would destroy the desired effect of the Commission's antitrust sanction, and could constitute a new breach of EU antitrust law.

He said “The royalties demanded by Microsoft thus are clearly not at a commercial rate, let alone fair, reasonable and non-discriminatory”. Microsoft strongly denied this, arguing that the protocols contained “some of Microsoft's most valuable server technology innovations”. There was no danger of excessive fees, because an independent monitor would guarantee that prices remained “commercially practicable.”

An official said: “There is a price list, and if people feel it doesn't work, then we can sit down and talk and if that doesn't work they can turn to the monitoring trustee.”

Details of the draft licensing agreement were published on Microsoft's website on Monday, and in spite of the hostile reception, represent an improvement on terms outlined earlier. According to the group's “pricing summary”, companies wishing to license all protocols would have to give 8.5 per cent of their revenues on a new product to Microsoft. That drops to 7.5 per cent and 4.5 per cent if companies chose to license only some of the protocols. In any case, Microsoft's royalties will not exceed $950 for an individual server.

Mr Vinje said: “The royalties demanded by Microsoft reflect not any innovative value of the protocols, but rather the strategic value flowing from the ability to prevent interoperability.”

Microsoft's proposals on implementing the Commission's antitrust ruling are being tested with market participants. Neelie Kroes the competition commissioner, will then decide whether to accept Microsoft's plan.

Get alerts on Technology sector when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article