EU threatens Microsoft with penalties
(AP)
Updated: 2005-12-23 08:53

The European Union on Thursday threatened to fine Microsoft Corp. up to 2 million euros ($2.37 million) a day for failing to obey its 2004 antitrust ruling, accusing the company of intransigence in sharing information with competitors.

"I have given Microsoft every opportunity to comply with its obligations. However, I have been left with no alternative other than to proceed via the formal route to ensure Microsoft's compliance," said EU Antitrust Commissioner Neelie Kroes.

The threat of new sanctions against Microsoft aims to force it to provide more detailed information so competitors' products can be made more compatible with Microsoft's Windows server operating system.

It follows an independent computer scientist's scathing assessment of what Microsoft has thus far provided, and set off a new round of bickering between the software company and regulators.

Brad Smith, Microsoft's top lawyer, accused the EU Commission of threatening the fine before it had even reviewed highly technical documentation he said Microsoft sent to European officials on Wednesday.

"We don't understand how they can reach these conclusions because they haven't read or reviewed these documents," Smith said.

He also expressed frustration with the EU's repeated requests for information.

"Every time we do absolutely everything we've been asked to do, we're told that there's something else we need to do," Smith said in an interview with The Associated Press.

EU spokesman Jonathan Todd said the EU had not yet received copies of the documents that Microsoft said it sent.

But he expressed little hope they would address some of the EU's major concerns. The last Microsoft letter did little more than promise that the company would correct Web links and other formatting errors, said Todd.

The European Commission takes its Christmas vacation on Friday so the delay, in effect, forces the EU to wait until the second week of January before it can assess any changes.

The EU's decision was based on a trustee's finding that Microsoft's compliance with the 2004 ruling was insufficient.

"Any programmer or programming team seeking to use the technical documentation for a real development exercise would be wholly and completely unable to proceed on the basis of the documentation. The technical documentation is therefore totally unfit at this stage for its intended purpose," the trustee, British computer scientist Neil Barrett, said in a report.

"The documentation appears to be fundamentally flawed in its conception, and in its level of explanation and detail. ... Overall, the process of using the documentation is an absolutely frustrating, time-consuming and ultimately fruitless task. The documentation needs quite drastic overhaul before it could be considered workable."

Smith said the EU was now demanding more than regulators originally said they would require, forcing the company to provide technical documentation that could allow a competitor to clone its valuable Windows server software.

Todd said Microsoft was wrong to claim the EU has been moving beyond the terms of its original antitrust order.

"The goalposts have not moved... We are not making new and changing demands," he said. "We simply request that Microsoft comply with what is in the March 2004 decision... Nothing more, nothing less."

The EU said it was also investigating the royalties Microsoft would charge for using its software information and said another legal challenge might be issued if it was unhappy with the financial demands.

To back its claim, the EU Commission on Thursday issued a formal "statement of objections," a measure that could lead to the hefty daily penalties that would be backdated to a Dec. 15 deadline to provide more information.

In March 2004, the EU ordered Microsoft to pay 497 million euros ($613 million), share server software blueprints with rivals and offer an unbundled version of Windows without the Media Player software for what it saw as an abuse of its dominant position in the industry.

The Court of First Instance, the EU's second-highest court, has not yet set a date to hear Microsoft's appeal.

Microsoft now has five weeks to react to Thursday's statement of objections and may have an oral hearing with antitrust authorities.

Microsoft shares fell 14 cents to close at $26.59 Thursday on the Nasdaq Stock Market.