Microsoft, Trying to Avoid a European Fine, Defends Demand for Royalties

Maybe Redmond realizes hitting them with your purse isn't enough

Microsoft, seeking to avoid another multimillion-dollar fine in its antitrust battle with the European Commission, filed documents with competition officials yesterday defending its demand to be paid royalties for releasing some software code to competitors.

Without disclosing what is in the documents, Tom Brookes, a Microsoft spokesman in Brussels, said the company filed its response to the commission’s charge on March 1 that it was violating a 2004 order to share the code at “reasonable terms” so competitors could design software that worked seamlessly with Microsoft computer servers.

The legal skirmishes over the European Commission’s antitrust ruling against Microsoft are moving into a fourth year. In its original ruling, the commission ordered Microsoft to sell a version of its Windows operating system without its Windows Media Player. Microsoft did so, but the so-called N version, which sold for the same price as Windows with the Media Player included, was a commercial flop.

Microsoft maintains that the other remedy imposed in the 2004 ruling — that it share its confidential server software code — implied that it could charge royalties.

But competitors say that Microsoft is asking exorbitant fees, discouraging many from designing software to work with Microsoft products. According to its Web site, Microsoft is proposing royalty fees that range from $5.60 to $666.75 a server under a formula that ties the fee level to the revenue generated by any software designed using Microsoft’s information.

In March 2004, the European Commission fined Microsoft 497.2 million euros (about $600 million at the time) for violating European antitrust law. Neelie Kroes, the European competition commissioner, imposed a further 280.5 million euros in fines in July 2006.

Under commission rules, Ms. Kroes could impose additional fines of up to 3 million euros a day, retroactive to last Aug. 1. Through Tuesday, that would add up to as much as 801 million euros (about $1.09 billion).

Jonathan Todd, a spokesman for Ms. Kroes, said that before she could levy more fines, she would have to consult an advisory committee of 27 European competition commissioners and, ultimately, win approval from the full European Commission.

http://www.nytimes.com/2007/04/24/technology/24soft.html?ref=technology