European Union Microsoft competition case

The European Union Microsoft competition case is a case brought by the European Commission of the European Union (EU) against Microsoft for abuse of its dominant position in the market (according to competition law). It started as a complaint from Novell over Microsoft's licensing practices in 1993, and eventually resulted in the EU ordering Microsoft to divulge certain information about its server products and release a version of Microsoft Windows without Windows Media Player.

Initial complaints

In 1993, Novell said that Microsoft was blocking its competitors out of the market through anti-competitive practices. The complaint centred on the license practices at the time which required royalties from each computer sold by a supplier of Microsoft's operating system, whether or not the unit actually contained the Windows operating system. Microsoft reached a settlement in 1994, ending some of its license practices. [cite news | url=http://www.news.com/2100-1023_3-204317.html | title=Microsoft investigated in Europe | first=Lamia | last=Abu-Haidar | publisher=CNET News.com | date=1997-10-16 | accessdate=2006-07-01]

Sun Microsystems joined the fray in 1998 when it complained about the lack of disclosure of some of the interfaces to Windows NT. The case widened even more when the EU started to look into how streaming media technologies were integrated with Windows. [cite news | url=http://www.news.com/2100-1001_3-941090.html | title=EU looks to wrap up Microsoft probe | publisher=CNET News.com | first=Declan | last=McCullagh | authorlink=Declan McCullagh | date=2002-07-01 | accessdate=2006-07-01]

Judgment

Citing ongoing abuse by Microsoft, the EU reached a preliminary decision in the case in 2003 and ordered the company to offer both a version of Windows without Windows Media Player and the information necessary for competing networking software to interact fully with Windows desktops and servers. [cite news | url=http://www.news.com/2100-1016_3-5060463.html | title=EU closes in on Microsoft penalty | publisher=CNET News.com | first=Ina | last=Fried | authorlink=Ina Fried | date=2007-08-06 | accessdate=2006-07-01] In March 2004, the EU ordered Microsoft to pay €497 million ($794 million or £381 million), the largest fine ever handed out by the EU at the time, in addition to the previous penalties, which included 120 days to divulge the server information and 90 days to produce a version of Windows without Windows Media Player. [ [http://ec.europa.eu/comm/competition/antitrust/cases/decisions/37792/en.pdf Commission Decision of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 Microsoft)] . Commission of the European Communities. Brussels, 21 April 2004.] [cite news | url=http://www.cnn.com/2004/BUSINESS/03/24/microsoft.eu/ | title=Microsoft hit by record EU fine | publisher=CNN | date=2004-03-24 | accessdate=2006-05-19] [cite news | url=http://www.news.com/EU+slaps+record+fine+on+Microsoft/2100-1001_3-5178281.html | title=EU slaps record fine on Microsoft | publisher=CNET News.com | first=Michael | last=Parsons | coauthors=Best, Jo | date=2004-03-24 | accessdate=2006-07-01]

The next month Microsoft released a paper containing scathing commentary on the ruling including: "The commission is seeking to make new law that will have an adverse impact on intellectual property rights and the ability of dominant firms to innovate." [cite news | url=http://www.news.com/2100-1016_3-5197390.html | title=Microsoft commentary slams EU ruling | publisher=CNET News.com | first=Ina | last=Fried | authorlink=Ina Fried | date=2004-04-21 | accessdate=2006-07-01] Microsoft paid the fine in full in July 2004. [cite news | url=http://www.news.com/2100-1014_3-5255715.html | title=Microsoft pays EU in full | publisher=CNET News.com | first=Matt | last=Hines | date=2004-07-02 | accessdate=2006-07-01]

Follow-up

Microsoft has a compliant version of its flagship operating system without Windows Media Player available under the negotiated name "Windows XP N." [cite news | url=http://www.news.com/2100-1016_3-5960750.html | title=Still 'no demand' for media-player-free Windows | publisher=CNET News.com | first=Ingrid | last=Marson | date=2005-11-18 | accessdate=2006-07-01] In response to the server information requirement, Microsoft released the source code, but not the specifications, to Windows Server 2003 service pack 1 to members of its Work Group Server Protocol Program (WSPP) on the day of the original deadline. [cite news | url=http://open.itworld.com/4914/060125ms_ups_ante/page_1.html | title=Microsoft ups the ante with the E.C. | publisher=ITworld.com | first=Neil | last=Macehiter | date=2006-01-25 | accessdate=2006-07-01] Microsoft also appealed the case, and the EU had a week-long hearing over the appeal which ended in April 2006. [cite news | url=http://news.bbc.co.uk/1/hi/business/4953682.stm | title=Microsoft's EU appeal case ends | publisher=BBC | date=2006-04-28 | accessdate=2006-07-01]

In December 2005 the EU announced that it believed Microsoft did not comply fully with the ruling, stating that the company did not disclose appropriate information about its server programs. The EU said that it would begin to fine Microsoft €2 million (US$3.20 million or £1.53 million) a day until it did so. [cite news | url=http://news.bbc.co.uk/2/hi/business/4552214.stm | title=Microsoft may face daily EU fine | publisher=BBC | date=2005-12-22 | accessdate=2006-07-01] Microsoft stated in June 2006 that it had begun to provide the EU with the requested information, but according to the BBC the EU stated that it was too late. [cite news | url=http://news.bbc.co.uk/2/hi/business/5120536.stm | title=Brussels poised to fine Microsoft | publisher=BBC | date=2006-06-27 | accessdate=2006-07-01]

On 12 July 2006, the EU fined Microsoft for an additional €280.5 million (US$448.58 million), €1.5 million (US$2.39 million) per day from 16 December 2005 to 20 June 2006. The EU threatened to increase the fine to €3 million ($4.80 million) per day on 31 July 2006 if Microsoft did not comply by then. [cite news | url=http://www.zeropaid.com/bbs/archive/index.php/t-38334.html | title=EU fines Microsoft $357.3 million for defiance | publisher=Reuters | first=David | last=Lawsky | coauthors=Zawadzki, Sabina | date=2006-07-12 | accessdate=2006-07-12]

On 17 September 2007, Microsoft lost their appeal against the European Commission's case. The €497 million fine was upheld, as were the requirements regarding server interoperability information and bundling of Media Player. In addition, Microsoft has to pay 80 percent of the legal costs of the Commission, while the Commission has to pay 20 percent of the legal costs by Microsoft. However, the appeal court rejected the Commission ruling that an independent monitoring trustee should have unlimited access to internal company organization in the future. [ [http://news.bbc.co.uk/1/hi/business/6998272.stm Microsoft loses anti-trust appeal] . BBC News, 17 September 2007] [ [http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=Rechercher$docrequire=alldocs&numaff=T-201/04&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100 Judgment of the court of first instance (Grand Chamber), Case T-201/04] . 17 september 2007, Luxembourg.] On 22 October 2007, Microsoft announced that it would comply and not appeal the decision any more, [ [http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tnBusinessNews&storyID=2007-10-22T114840Z_01_BRE001179_RTRIDST_0_BUSINESS-MICROSOFT-EU-DC.XML Microsoft finally bows to EU antitrust measures] . Reuters. 22 October 2007.] and Microsoft did not appeal within the required two months as of 17 November 2007. [ [http://www.cafebabel.com/en/article.asp?T=A&Id=2863 Appeal deadline is over] ]

Microsoft announced that it will demand 0.4 percent of the revenue (rather than 5.95 percent) in patent-licensing royalties, only from commercial vendors of interoperable software and promised not to seek patent royalties from individual open source developers. The interoperability information alone is available for a one-time fee of €10,000 (US$15,992). [ [http://www.itnews.com.au/News/63623,eu-forces-microsoft-to-cage-open-source-patent-dogs.aspx EU forces Microsoft to cage open source patent dogs] . itNews, 24 October 2007.]

On 27 February 2008, the EU fined Microsoft an additional €899 million (US$1.44 billion) for failure to comply with the March 2004 antitrust decision. This represents the largest penalty ever imposed in 50 years of EU competition policy. This latest decision follows a prior €280.5 million fine for non-compliance, covering the period from June 21, 2006 until October 21, 2007. [ [http://www.iht.com/articles/reuters/2008/02/27/business/OUKBS-UK-MICROSOFT-EU.php EU fines Microsoft 899 million] ] On 9 May 2008 Microsoft lodged an appeal in the European Court of First Instance seeking to overturn the €899 million fine, officially stating that it intended to use the action as a "constructive effort to seek clarity from the court". [ [http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9084578&taxonomyId=14&intsrc=kc_top Update: Microsoft to appeal $1.3B EU fine ] ]

In its 2008 Annual Report Microsoft stated: [http://news.cnet.com/8301-13505_3-10005379-16.html]

Related investigation

EU announced it is going to investigate Microsoft Office Office Open XML Format support. [ [http://www.reuters.com/article/technologyNews/idUSL2257119220080522 EU says to study Microsoft's open-source step] ]

ee also

* United States Microsoft antitrust case
* Criticism of Microsoft
*Microsoft litigation

References

External links

*European Committee for Interoperable Systems (ECIS) [http://www.ecis.eu/issues/CFI_Microsoft.htm The Court of First Instance's judgment in case T-201/04 Microsoft v Commission & background documents] . Accessed 2007-09-21
* [http://www.microsoft.com/mscorp/legal/eudecision/ Microsoft] – Microsoft's implementation of the EU ruling
* [http://ec.europa.eu/comm/competition/antitrust/cases/decisions/37792/en.pdf European Union] – Text of the European Union ruling against Microsoft
* [http://ec.europa.eu/comm/competition/antitrust/cases/index/by_nr_75.html#i37_792 List of press releases by the European Union about the Microsoft case]
* [http://fsfeurope.org/projects/ms-vs-eu/ms-vs-eu.en.html FSFE's case project page] , FSFE have been third-party in the case since 2001
* [http://www.groklaw.net/article.php?story=20070919214307459 Groklaw interview Georg Greve(FSFE), Jeremy Allison and Volker Lendecke(Samba developers), and Carlo Piana(their lawyer)] , these people participated in the case