Microsoft Bows to EU Regulators On 2004 Antitrust MeasuresMicrosoft Corp. threw in the towel on its nine-year antitrust fight with European Union regulators, saying it won't appeal a court judgment handed down last month that could lead to more cases against other big global technology companies.
Microsoft also agreed Monday to slash royalty charges on licenses that EU regulators had forced the company to supply so that competitors could link their products effectively to Microsoft's ubiquitous Windows operating systems. The Redmond, Wash., software giant's decision not to appeal, announced in a press release this morning, makes the EU's tough stance on monopoly abuses settled law. It also confirms the EU's power to compel a dominant company to share its intellectual property with competitors.
The Court of First Instance, Europe's second-highest tribunal, outlined that authority in judgment in September. The court's ruling in Europe's most significant monopoly case in years had been eagerly awaited as a guide to the boundaries of the EU's antitrust power. When the court spoke, it delivered a clear message: That power is broad. The court held that antitrust regulators were correct to condemn Microsoft for holding back technical information that would allow competitors' products to work with machines running Windows, and for bundling a media player inside its operating system.
Legal experts said the judgment came down so firmly against Microsoft that the company had little room to mount an appeal. Instead, Microsoft sought a deal. Microsoft CEO Steve Ballmer and EU Competition Commissioner Neelie Kroes brokered one over dinner in a small restaurant in Mrs. Kroes's home country of the Netherlands, according to Ms. Kroes.
Under the agreement, Microsoft will license all of its intellectual property, except patents, necessary for competitors to work with a version of Windows used on business servers. Competitors will now pay only a one-time fee for the license of 10,000 euros, rather than royalties. If they believe they need to license patents from Microsoft, Microsoft is required to do so at the rate of 0.4% of the competitors' revenue from the product, well below the 5.95% rate originally suggested by Microsoft.
Mrs. Kroes, for her part, stopped the clock on daily fines of up to €3 million per day against Microsoft and declared the U.S. software giant was – at least for now -- in Europe's good graces. "As of today, the major issues concerning compliance have been resolved," she said.
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