Microsoft case focuses on sharing of computer code
Microsoft Corp. today complained that the European Commission had forced it to hand over trade secrets to rivals, effectively giving them a “free ride” on the work the software maker did to acquire new customers and develop new technologies.
But the European Commission argued that “super-dominant” Microsoft had managed to strangle its rivals’ innovation by holding back information needed to make their software work with the hugely popular Windows operating system.
Microsoft’s legal challenge to a 2004 antitrust order was in its third day today, shifting focus to EU regulators’ order that the company give interoperability information to rivals.
Commission lawyer Anthony Whelan said Novell Inc. and Sun Microsystems Inc. were reduced to catering for network servers using “last century’s technology” - Windows NT – because Microsoft withheld the code needed to allow servers work smoothly with PC clients running the world’s most-used desktop software.
“In network computing, the client is king and the client speaks Windows,” he said.
Microsoft’s refusal to supply server protocols meant most servers had to use more time-consuming and expensive ways to supply software people wanted, keeping them a generation behind Microsoft releases, he said.
However, Microsoft lawyer Ian Forrester said the order had been an attempt “to handicap the (market) leader in perpetuity.”
“The decision condemned a company for not saying yes to a company who requests a huge amount of secret technology for the future,” he said. “The Windows source code is copyright. It is valuable, the fruit of lots of effort.”
Microsoft insisted that the survival of its rivals and the emergence of new firms proved the competition was viable.
But Whelan said the degree of interoperability Microsoft allowed was “simply not viable for most customers” who saw networks crash because non-Microsoft servers did not have the same backup.
Thomas Vinje, a lawyer for an industry group supporting the Commission – the European Committee for Interoperable Systems – said Microsoft was trying to blow its patent rights out of proportion and skirt around the key issue of the company’s monopoly power.
“Microsoft are trying to turn this into an intellectual property case when it’s not,” he said. “This is a case about abuse of a dominant position, about refusing to provide information to vendors.”
Microsoft broke an informal agreement with EU advocates when it dragged up the recent dispute over the company’s compliance with the order – earning them a stern reprimand from Judge Bo Vesterdorf, who told Forrester to stick to the issue at stake.
Forrester had claimed that Microsoft was being threatened with €2m in daily fines, backdated to December 15, for not creating “a new copyright work” derived from Windows secret source code.
EU regulators had asked Microsoft to supply a “complete and accurate” support manual for developers to help them make compatible software.
Last December, they charged Microsoft with not obeying the order after an independent monitor branded Microsoft’s 12,650-page technical manual as “unfit at this stage for its intended purpose.”
The world’s largest software maker says it has the right to guard its valuable intellectual property, and maintains that it has worked strenuously to comply with the 2004 EU ruling that told it to pay a record €497m fine.
The ruling was handed down after a five-year investigation concluded that Microsoft had taken advantage of its position as the leading supplier of operating systems to damage rivals who offered server software and media player programs.
Forrester said Microsoft’s server software was compatible with products made by other companies, such as those from Novell and Sun and using Linux and UNIX-based servers.
Microsoft executive John Shewchuk gave a presentation that showed the company’s contention that server compatibility was a reality and worked with the Windows operating system, which runs on 95% of the world’s personal computers.
“Microsoft spends an enormous amount of effort attempting to achieve interoperability,” he said.
In a new complaint filed in February, the European Committee for Interoperable Systems said times have changed, but Microsoft’s behaviour has not. It claimed Microsoft is up to the same tricks – but on a wider scale.
While a court decision on the ruling is not due for months, a decision backing the commission could force Microsoft to change the way it does business in the future and endorse the EU’s ability to hold back aggressive corporate behaviour.
An appeal is not certain since Microsoft would need strong legal arguments to protest the ruling to the EU’s highest court, the European Court of Justice.
