EU Commission sends new warning to Microsoft for incomplete data

EU Commission sends new warning to Microsoft for incomplete data - 10 march 2006 - 19:30

BRUSSELS - New reports show Microsoft's compliance with a landmark antitrust ruling continues to be “entirely inadequate” and the company may soon face a fine up to 2 million euros daily, the European Commission said on Friday. European Union regulators accused Microsoft Corp. of defying a March 2004 antitrust order by providing “incomplete, inaccurate and unusable” data about the workings of its Windows operating system.

The EU Commission found two years ago that Microsoft used its dominant position in the Windows operating system to damage rival makers of server software used to run printers, password sign-ins and file access for small work groups. Microsoft, whose software runs more than 90 percent of the world's personal computers, may be more willing to fight this case than antitrust claims in the US because Chief Executive Officer Steve Ballmer is looking for advantages in his fight against competitors including Google Inc., Stahlman said. The EU Commission opened proceedings to fine Microsoft in a Statement of Objections issued on Dec. 21, 2005. It said the company failed to properly document the interoperability software and rivals could not use them. The EU Commission said that “Microsoft is still not in compliance with its obligations under the March 2004 Commission decision.” Microsoft has challenged the 2004 decision and a hearing on its underlying case is set before the Court of First Instance in Luxembourg starting on Monday April 24.

EU Commission sends new warning to Microsoft for incomplete data

EU Commission sends new letter to Microsoft on compliance with decision : The European Commission has sent a letter to Microsoft setting out its preliminary view on how Microsoft is still not in compliance with its obligations under the March 2004 Commission decision (see IP/04/382). In particular, the letter includes a report from the Monitoring Trustee (see IP/05/1215) that contains factual information supporting the Commission's objections outlined in a Statement of Objections (SO) of 21 December 2005 (see IP/05/1695). The SO indicated that Microsoft had not yet complied with the obligation, imposed by the Commission's March 2004 decision that Microsoft infringed EC Treaty rules on abuse of a dominant position (Article 82), to disclose complete and accurate interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers. The letter sent today brings this information to Microsoft's immediate attention, in order to provide Microsoft the opportunity to make its views known in writing.

Professor Neil Barrett, the Monitoring Trustee, is a computer science expert appointed by the Commission on the basis of a shortlist of candidates submitted by Microsoft. He provides technical advice to the Commission on issues relating to Microsoft's compliance with the Commission's March 2004 Decision.

The Commission has also sent Microsoft a report from TAEUS Europe Ltd, the European subsidiary of TAEUS International Corporation, a Colorado-based firm that specialises in intellectual property valuation, reverse engineering, litigation support and expert testimony, recruited by the Commission as expert advisors in December 2005.

The obligations imposed by the March 2004 Decision were suspended pending the Court of First Instance's consideration of Microsoft's request for interim measures, a request denied on 22 December 2004. After that date, the Commission discussed with Microsoft its compliance, and market tested Microsoft's proposals on interoperability. In light of the results of that market test, the Commission issued a decision on 10 November 2005 pursuant to Article 24 of Regulation 1/2003. This warned that should Microsoft not comply by 15 December 2005 with its obligation to: (i) supply complete and accurate interoperability information; and (ii) make that information available on reasonable terms, it would face a daily fine of up to €2 million. The Commission then sent a Statement of Objections to Microsoft on 22 December 2005.

Following the Statement of Objections, Microsoft provided the Trustee with revised interoperability documentation on 29 December 2005 and the Trustee met with Microsoft's engineers on 30 and 31 January 2006. The Trustee's latest report, which he began as soon as he received the revised documentation, was recently completed. Having analysed the latest reports from the Trustee and TAEUS, the Commission takes the preliminary view that this information continues to be incomplete and inaccurate.

The Monitoring Trustee notes that although it was improved slightly, “nothing substantial was added to the Technical Documentation” compared to the previous version, and that the material continues to be incomplete, inaccurate and unusable. The improvements required to the documentation are not merely refinements or improvements to the text: the documentation as it stands is unusable.

TAEUS has analysed the reports from the Trustee cited in the 21 December Statement of Objections and has also looked at Microsoft's documentation. The report describes various parts of the documentation as “entirely inadequate”, “devoted to obsolete functionality” and “self-contradictory”. TAEUS concludes that Microsoft's documentation was written “primarily to maximize volume (page count) while minimizing useful information.”

In addition, both reports point out that Microsoft appears to assume that it is for users of the documentation to report incorrect, incomplete or inaccurate information which Microsoft would then correct. Professor Barrett concludes: “The response that such ‘bugs' in the documentation are unavoidable is understandable, but to expect that all such subsequent problems will be encountered and reported by users... is not sufficient. It is Microsoft's responsibility to present suitable documentation...”.

TAEUS compares this to a car manufacturer responding to a customer complaint that a car had been delivered without wheels: “this would be like the manufacturer supplying wheels only to have the next deficiency come up – namely that the automobile has no engine, and then no steering wheel, then no brakes, ...”

Microsoft has requested an Oral Hearing, scheduled for 30 and 31 March 2006. The Commission may then, after consulting the Advisory Committee of Member State Competition Authorities, issue a decision pursuant to Article 24 of Regulation 1/2003 imposing a fine on Microsoft for every day between 15 December 2005 and the date of that Article 24 decision. The Commission may then take other steps to continue the daily fine until Microsoft complies with the March 2004 Decision.

Microsoft later provided additional information and offered to open some of its secret source code to licensees, but further reviews by the Commission's Monitoring Trustee and TAEUS, a consultant from Colorado, said those gestures meant little.

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