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'
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,
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,
"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."