Microsoft Makes Concessions to Comply With EU

Microsoft Corp. (MSFT) said Monday it had made several concessions to ensure that its dominant Windows operating system complies with the European Union's (search) landmark antitrust ruling against the U.S. software giant.

The EU head office said Microsoft's rivals will get a chance to assess the proposals, aimed at letting rivals build technology — software for the powerful, centralized computers that work behind the scenes to run Web sites and corporate networks — to compete directly with computers running Windows.

EU spokesman Jonathan Todd said the testing will last two weeks, and a decision on whether EU considers Microsoft in compliance will come by the end of July.

EU antitrust regulators fined Microsoft a record $654 million when they ruled last year that Microsoft abusively wielded its Windows software monopoly and locked competitors out of the market.

The EU ruling requires the company to offer an alternative Windows version for sale without its video and music Windows Media Player (search) application. Microsoft also has to make technical information available to allow rivals to improve the interoperability of their products with the Windows server.

The EU can fine Microsoft up to 5 percent of its daily global sales for each day that a decision is not applied to the EU's satisfaction.

The company agreed to negotiate licenses with rivals to use Microsoft technology to build competing products, and to meet lingering EU concerns, Microsoft said it has revised its royalty structure — in some cases, offering Windows codes entirely free of payments.

The company also agreed to allow worldwide distribution of rival products containing the Microsoft technology, rather than just limiting it to Europe.

The agreement does not extend to selling outside Europe versions of Windows without its bundled media player.

But Microsoft did agree to let Windows automatically recognize additional file types, such as those used by a rival media player from RealNetworks Inc.

One unresolved dispute will send Microsoft and the commission back to the courtroom. Microsoft insisted that developers who write software that incorporates Microsoft's technology can't freely disclose their own software blueprints because it wouldn't adequately protect Microsoft's rights.

The commission said such restrictions would unnecessarily hinder competition against Microsoft in the so-called open source community of software engineers.

EU Competition Commissioner Neelie Kroes said she remained "determined to ensure that all elements of the (2004) decision are properly implemented."

"This includes the ability for developers of open-source software to take advantage of the remedy," Kroes said.

Microsoft CEO Steve Ballmer said the company made the alterations to resolve a standoff with EU regulators that has dragged on for some five years.

Microsoft met an EU deadline last week to answer complaints from EU regulators that it was not fully complying with the ruling. Those replies are being studied, officials said.

Both the EU and Microsoft refused to divulge the content of the proposals.

During the last days of talks, however, negotiations centered on pricing and royalties that Microsoft could charge its software competitors.

Todd said the two sides have yet to decide on an independent referee, whose job it will be to ensure that Microsoft is complying with the EU ruling.

"We have not agreed on a name," Todd said. "We hope that Microsoft will come forward with acceptable candidate very shortly. We are expecting to involve the trustee in assessment of market testing."