Microsoft Asks EC for Clarity on Protocol Pricing

Published: April 25, 2007

by Alex Woodie

The ongoing legal battle between Microsoft and the European Commission continued this week as the software giant submitted documents asking the commission for greater clarity over how much it should charge for licenses for the server protocols at the heart of their dispute

Microsoft and the EC have been in a legal tussle since the court's landmark March 2004 ruling that found Microsoft was hurting its competitors by not providing easy access to the server protocols that its competitors need to write Windows-based, client-server applications.

As part of the remedy, the EC required Microsoft to clearly document the protocols, a long, drawn-out process that has resulted in numerous disagreements, bickering, and hand-wringing between the two sides. The EC must also sign off on the way that Microsoft plans to license and distribute the server protocols, to make sure it's not unduly preventing competitors from obtaining the protocols they need to write clients-server applications. (Microsoft has also been fined over $1 billion by the EC and was required to ship a European version of Windows that did not contain the Windows Media Player, but these are separate to the issue of the protocols.)

When we last left this lurid tale, the EC issued a document called a "statement of objections." In it, the EC accused Microsoft of unfairness in its proposed protocol pricing scheme, and also accused the convicted monopolist of having no innovation (which surely added insult to injury).

Microsoft was supposed to respond to the statement of objections within four weeks. Now, six weeks later (the EC granted a 20-day extension), Microsoft has issued a response that indicates it may be getting tired of the legal shenanigans--tired of the oral hearings--and is ready to get down to brass tacks.

"We need greater clarity on what prices the Commission wants us to charge, and we believe that is more likely to come from a constructive conversation than from a formal hearing," said Brad Smith, senior vice president and general counsel for Microsoft, in a written statement.

So the ball is back in the EC's court. It's up to the EC to respond to Microsoft's reply. It can either accept Microsoft offer for a "constructive conversation" or it could decide it's had enough, and impose another penalty.

Meanwhile, the EC still has not signed off on the 8,500-page document detailing the communication protocols, which has been the source of so much consternation over the last two years.

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Microsoft Lacks Innovation, Fairness in Pricing of Protocols, EC Says

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