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Fallout continues from the European report on Microsoft

Fallout continues from the European report on Microsoft

The passage of a few weeks hasn’t diminished the fallout from the European Commission’s decision to fine Microsoft about $600 million, remake the Windows operating system and level the playing field for European server makers.

The European Commission’s 300-page document, made public for the first time last week, said the record fine imposed on Microsoft arose from the longstanding nature of the software company’s anticompetitive practices over more than a 5-year duration.

The report is a full account of the investigation by the European Commission, the executive arm of the 15-nation European Union, into the way Microsoft sells software, and had been expected, since regulators announced their decision in March. That ruling found that the Redmond, WA., company had failed to give rivals information that they needed to compete fairly in the market for server software and that it had been offering the Windows operating system on the condition that it come bundled with Windows Media Player, stifling competition.

Microsoft posted a 7-page response to its Web site that portrayed the company as the victim of overreaching regulators. Microsoft called the ruling a “new law” and cited both the ruling’s potential to cause damage and its alleged legal shortcomings. The company intends to appeal the remedies outlined by the regulators.

The ruling gave Microsoft 90 days to provide a version of Windows without Media Player, although it can also continue to provide a version that includes the media software. The software giant would be required to offer an operating system without Media Player that would perform as well as the bundled version of the Windows. It would be prohibited from offering a Media Player download link without also providing a similar link to its competitors’ players.

“Microsoft must not give OEMs or users a discount conditional on their obtaining Windows together with WMP (Windows Media Player) ... or otherwise, remove or restrict OEMs’ or users’ freedom to choose the version of Windows without (Media Player),” the report said.

The commission also prohibited Microsoft from shipping Media Player with another Microsoft product — such as its Office software suite — that is dominant in its own market much as Windows is among operating systems.

The EU document also offered historical insight into Microsoft’s business practices and how company executives viewed the software maker’s market position. In one example, it notes that Microsoft withheld information from rival Sun Microsystems on the issue of interoperability.

In September 1998, Richard Green, a Sun vice president, wrote a letter to Paul Maritz, a Microsoft executive vice president, in which Green requested from Microsoft “the complete information required to allow Sun ... to provide native support for the complete set of Active Directory technologies on Solaris.”

Sun’s request encompassed the specifications for certain protocols used by Windows work group servers. Although Maritz responded that the information was already available to Sun and other software developers via the Microsoft Developer Network and that relevant source code could be licensed from other sources, the commission found that Microsoft withheld information.

As a result, the commission’s solutions call for Microsoft to provide complete and accurate disclosure of protocols used by the Windows work group servers to provide file, print, group and user administration services to Windows work group networks. The protocols should be shared with competitors at about the same time Microsoft releases its products to beta testers, the order said.

The commission alleged Microsoft has a “clear incentive” to achieve a strong role in the media player market, which would serve as leverage in propagating its stake in proprietary media formats and technologies for its server software efforts, as well as bolster its relationship with content developers.

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