Again, Microsoft Responds to EU

Microsoft on Monday filed its official response to a March 1 European Union (EU) charge that the company was violating its 2004 antitrust order. Though the details of the response are currently unknown, Microsoft said that it was attempting to avoid further fines, but still had questions about the EU's complaints regarding royalty rates.

As you may recall, Microsoft was forced to supply a set of workgroup server documentation that competitors could license, but the EU had complaints about the quality of the documentation and the prices that Microsoft wanted to charge licensees for that information. Competitors have called the pricing "exorbitant," but Microsoft defends the fees--which range from $5.60 to $666.75 per server, depending on revenues generated by software created with the information--as reasonable.

So far, EU regulators have agreed with Microsoft's competitors, and Neelie Kroes, the EU antitrust chief, is currently considering imposing fines on Microsoft for its continued inability to conform to the terms of the 2004 ruling. Theoretically, Microsoft could be fined up to $4 million a day, retroactive to last August. A fine of that magnitude would cost Microsoft about $1 billion. However, that outcome is unlikely: Ms. Kroes would need to consult with 27 EU competition commissioners and gain approval from the EU before levying such a fine.

As usual, Microsoft is asking for more information. This time, the company would like to know what constitutes a reasonable fee for the information it is providing. "We need greater clarity on what prices the \[European\] Commission wants us to charge, and we believe that is more likely to come from a constructive conversation than from a formal hearing," Microsoft general counsel and senior vice president Brad Smith said.

And as if this weren't confusing enough, remember that Microsoft has appealed the original ruling. That case should be decided by September.

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