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Microsoft Penalized Over Servers

At its core, the $357 million fine levied against Microsoft Corp. comes down to one simple contention: Microsoft's software for computer servers works faster and more efficiently with its ubiquitous Windows operating system than do rivals' offerings.

European Union regulators have said the advantage isn't due to a superior design but rather because Microsoft steadfastly guards the inner workings of Windows, which runs an estimated 90 percent of the world's personal computers.

In 2004, they ordered the world's biggest software maker to explain clearly how its operating system exchanges information, arguing the documentation would allow competing server software to compete on a level playing field.

More than two years later, regulators say Redmond, Wash.-based Microsoft still has failed to comply with the order.

Specifically, they say, Microsoft hasn't disclosed enough about the technical languages, known as protocols in engineering parlance, that one machine uses to ask another device to carry out tasks, such as sharing an office printer or dishing out word-processing files stored on a hard drive.

"It's a very fundamental how-do-we-work-together type of definition, and Microsoft, by keeping secret the protocols it uses, makes sure that other companies can't write equivalent software," said Jonathan Eunice, a software analyst at research firm Illuminata.

Microsoft officials, who have vowed to appeal the decision, take exception to the EU characterizations. Brad Smith, Microsoft's general counsel, said the EU had not been clear about how Microsoft should present the information. The company has been trying in good faith to comply with the demands, it has said.

Eunice and other analysts are less sure.

"It seems very implausible to me that Microsoft can't come up with this stuff given the amount of time and resources they have," said Andy Gavil, a Howard University law professor who follows the company's antitrust cases in the U.S., Europe and elsewhere. "They're basically trying to forestall the competition that the remedy is supposed to facilitate."

But analyst Rob Enderle of the Enderle Group said it was less clear who might benefit from the kind of documentation the EU is seeking. Sun Microsystems Inc., which first complained about the lack of information, is facing a much bigger threat from the free Linux operating system than Microsoft's server offerings, he said.

Microsoft competitors Sun, Novell Inc. and IBM Corp., which in the past have publicly criticized Microsoft, declined to comment on Wednesday's fine. All three companies also have settled private antitrust claims against Microsoft.

And software such as that offered by the Apache Foundation, which makes a popular package for running Internet servers, is doing well despite the EU's claims, Enderle said.

"This one has always seemed very strange for me," he said of the fines the EU has promised if Microsoft doesn't deliver more documentation. "Other than doing a substantial amount of damage to Microsoft, it's not clear what the benefit is."

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