Microsoft closer to European truce
Over the course of their seven-year antitrust battle, Microsoft and the European Commission have developed something of a wary routine.
Every so often, the Brussels regulator slaps down the software group for breaking the rules once again, tut-tutting that it has little choice but to act. Microsoft assures the regulator that it has the utmost respect for its powers and procedures, but insists that it is really doing all it can to meet the Commission’s quite unreasonable demands.
The supporting roles in this well-rehearsed play are reliably filled on the one hand by Microsoft’s rivals – rushing in to support the Commission – and on the other by a batch of companies loyal to the software giant that recoil in disgust at the regulator’s heavy-handed intervention.
Yet amid the confrontational rhetoric that surrounded the Commission’s decision to impose fresh antitrust fines on Microsoft on Wednesday, there were signs that the old routine is drawing to a close.
Both sides voiced genuine confidence that the long-running conflict over Microsoft’s compliance with the Commission’s March 2004 decision is moving towards a resolution.
“I am very optimistic. What they are doing now is indeed constructive,” said Neelie Kroes, EU competition commissioner. She pointed to the fact that Microsoft was providing substantially improved technical documentation on the Windows operating system to the Commission – with the last batch due on July 18.
Microsoft, for one, believes this move will finally bring it into compliance with a key part of the March 2004 ruling, which obliges Microsoft to share technical information about Windows with rival software developers.
Brad Smith, Microsoft’s general counsel, said the recent progress reflected the fact that the Commission’s technical adviser in the case had now issued clear guidelines telling the group what to do.
“Having received a clear definition of the documentation requirements this April, we already have met nearly all those requirements in just three months. We have dedicated massive resources to deliver high-quality documentation,” Mr Smith said.
True, the Commission’s decision to raise the ceiling for future fines on Microsoft from the current €2m a day to €3m ($3.8m) a day indicates that further financial penalties are in store.
But for a group as rich as Microsoft, such fines will never weigh as heavily as the damage to reputation and the drag on management resources associated with its constant antitrust battles.
And provided there is no further breakdown in communications between the two sides, there seems a real chance that Microsoft and the Commission can close the chapter of this particular saga by the end of the year.
But while there was a glimmer of hope on the question of compliance, on Wednesday also brought a reminder that there are far greater and more acute worries for Microsoft on the regulatory front.
The principal importance of the March 2004 decision, after all, lies not in fines or the changes the changes that were forced on the group’s strategy, but in the precedent it sets for the future.
Ms Kroes made clear in March that she has every intention of using the precedent, not least by forcing Microsoft to change the make-up of Vista, the operating system due to replace Windows next year.
She wrote to Steve Ballmer, Microsoft chief executive, to express concerns about the planned integration of an internet search facility, a fixed document reader similar to PDF and other programmes into Vista.
Microsoft’s Mr Smith revealed on Wednesday that the group had responded to that letter by proposing several possible solutions to the concerns raised by the commissioner. One suggestion, he said, had been to ship Vista to Europe without Microsoft’s fixed document reader, until the EU’s second-highest court rules on Microsoft’s appeal against the 2004 ruling.
The group had also decided to incorporate some of the changes outlined by Ms Kroes into the version of Vista that will go on sale around the world, Mr Smith said.
The Commission has yet to give an indication of how it wants to pursue potential competition abuses linked to Vista.
Internet search, where Microsoft is desperate to catch up with the undisputed market leader Google, could prove a particularly contentious issue.
But what the first skirmishes on Vista reveal is the Commission’s abiding power to influence the shape of Microsoft’s flagship product.
And judging by her performance on Wednesday, Ms Kroes is in no mood to let this power go unused.
Microsoft, in any case, should not hope that resolving the stand-off over compliance will put an end to its antitrust woes in Brussels.