Microsoft mood is upbeat at Brussels hearing

Microsoft on Friday hailed a “breakthrough” in its long antitrust battle with the European Commission, saying it had finally understood what the competition regulator wanted the software group to do to avoid the threat of fines of up to €2m ($2.4m) a day.

Microsoft’s opponents said the group’s statement could mean it was preparing a climbdown to avoid the threat of fresh financial penalties. They also stressed that the Commission’s ruling clearly described Microsoft’s obligations, and that Microsoft should have complied with it more than two years ago.

However, following a two-day hearing into the case, Brad Smith, the group’s general counsel, said the group had at last been given the “specificity and clarity that we need in order to work in a constructive way”. Mr Smith added: “I believe that we have had a breakthrough.”

Microsoft officials said the group’s new-found optimism was the result of a discussion on Thursday night between its software engineers and Professor Neil Barrett, the British computer scientist who acts as the Commission’s technical adviser on the case. The two sides had agreed a template setting out what steps Microsoft had to take to move into compliance with the March 2004 decision.

A Commission spokesman stressed that Prof Barrett and Microsoft had been meeting for several months and that the Commission hoped that direct contacts would “eventually lead” to full compliance.

Several lawyers who attended the hearing on behalf of Microsoft’s rivals dismissed talk of a breakthrough. “It would indeed be a breakthrough if they complied with the March 2004 decision. The decision is very clear. They have known perfectly well what they have to do to comply ever since,” one lawyer said.

Another speculated that Microsoft’s move could herald a change of course: “It could be that now they have realised that they have delayed as long as they can and they must finally comply,” he said.

At the heart of the dispute is the allegation that Microsoft has not drawn up “complete and accurate” technical documentation that would allow rival software developers to design server software that runs smoothly with Windows. The group has so far drawn up about 12,500 pages of documentation but the Commission and Microsoft’s rivals say its efforts fall far short.

One person familiar with the hearing stressed that Prof Barrett had stressed that he still believed Microsoft had failed to comply. “Prof Barrett repeated in the hearing that the current documentation is not compliant and insufficient for interoperability,” the person said.