EU Antitrust File Has Frank Exchanges on Microsoft
Thu Apr 22, 2004 01:26 PM ET
By David Lawsky
SourceBRUSSELS (Reuters) - Microsoft customers stick with Windows despite patchy performance and high maintenance costs, a Microsoft executive bluntly told Bill Gates, according to the European Union's final decision in its antitrust case.
The executive's comment is part of a 302-page European Commission document laying out its reasoning for fining the software giant 497 million euros ($589.9 million) and ordering it to sell a version of Windows, its computer operating system, without audiovisual software.
The document, at [
europa.eu.int], touched off a spate of sniping between Microsoft, its supporters and its opponents as the case moves toward a battle before the European Union's Court of First Instance in Luxembourg.
The formal decision breaks no new ground but is filled with detailed reasoning for finding Microsoft a "quasi-monopolist" that illegally abused its power.
The decision draws on memos, testimony, U.S. court records and much more. It finds Microsoft can "behave to a very large extent independently of its competitors, its customers and ultimately of consumers."
To back that up, the decision quotes from an internal memo sent to Microsoft Chairman Bill Gates on February 21, 1997 by C++ general manager Aaron Contorer, a software expert.
"There is a huge switching cost to using a different operating system," he wrote Gates.
"It is this switching cost that has given customers the patience to stick with Windows through all our mistakes, our buggy drivers, our high TCO, our lack of a sexy version at times...
"It would be so much work to move over that they hope we just improve Windows rather than force them to move," he said.
The Commission says the barriers to the entry of rivals to which the memo refers place special obligations on Microsoft.
MICROSOFT ANSWERS Microsoft argued in a seven-page reply on its Web site, at www.microsoft.com/presspass/, that the Commission was "seeking to make new law that will have an adverse impact on intellectual property rights."
The Commission decision requires Microsoft to license code to rival makers of low-level servers so that their products work for Windows clients as well as Microsoft's own.
"When does a firm with a dominant proprietary technology have a legal duty to license its proprietary technology?" Microsoft said, arguing the decision "goes well beyond established precedents."
The decision also requires Microsoft to make available to computer makers a version of Windows without its now-ubiquitous Windows Media Player, so computer makers can offer other audiovisual software bundled with Windows instead.
Microsoft contends it should not have to do so, saying: "When is it unlawful for a dominant firm to incorporate new components or features that demonstrably improve its finished product?"
It engages in a battle of legal precedents to argue it need not offer an alternative version of Windows.
A Microsoft ally, the Association for Competitive Technology in Washington, said the decision would "harm consumers and innovation more than Microsoft."
A traditional Microsoft opponent, the Computer and Communications Industry Association, took a different tack by focusing on Microsoft's lobbying efforts in Washington.
President Ed Black wrote letters to Secretary of State Colin Powell and U.S. Trade Representative Robert Zoellick, telling them he knew they had been asked to "take extraordinary actions" because of the European decision.
Black urged them not to intervene. He said Microsoft was pressuring the U.S. government to pressure the European Union to ease off Microsoft.
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