BRUSSELS, Belgium – Under threat of daily fines by European Union antitrust regulators, Microsoft Corp. (MSFT) agreed Wednesday to let competitors examine some of the blueprints to its flagship Windows operating system.
Microsoft said it would offer commercial rivals access to a "pretty significant" chunk of the source code governing communications between servers. The code is from its Windows workgroup server and its desktop operating systems.
Responding to a 2004 EU antitrust ruling, Microsoft in December offered rivals thousands of pages of documentation and free technical support on the communications protocols for its software for running servers, the machines powering Web sites and other Internet services.
But an independent monitor nominated by Microsoft last month called the documents "totally unfit for its intended purpose."
"Microsoft is not disclosing complete and accurate interface information to allow non-Microsoft workgroup servers to receive full interoperability with Windows PCs and servers," said EU spokesman Jonathan Todd.
He said EU regulators took note that the U.S. Department of Justice was also claiming that Microsoft was failing to provide the technical information asked for in a DOJ settlement.
The European Commission then threatened to fine Microsoft up to $2.36 million a day, retroactive to Dec. 15, saying the software giant was proving intransigent about sharing data with competitors.
Although Microsoft insists what it had provided was adequate, the company said it was releasing the source code to address any lingering regulatory concerns.
"The source code is the ultimate documentation," said Brad Smith, Microsoft's chief counsel. "It should have the answer to any questions that remain."
He described the announcement as a "bold stroke" by Microsoft.
The European Commission said it would study Microsoft's offer carefully once it had received the full details, adding that it looked forward to receiving by the Feb. 15 deadline Microsoft's reply to the charge sheet it sent in December.
The technical information is important for competitors to make their software compatible with Windows servers.
Software developers will have to pay an unspecified amount for the right to inspect the source code and will be prohibited from publicly disseminating the information. And Microsoft won't make the entire Windows source code available — only the portions dealing with communications between servers.
By contrast, the entire code for open-source platforms such as Linux are publicly available without charge.
Several countries, including Brazil, China, France, Germany, Japan and South Korea have been actively moving toward open-source alternatives like Linux, and Microsoft has been under increased pressure to make its proprietary code available for inspection.
Microsoft has launched a number of efforts to give governments and certain private groups access to some source code. Microsoft said it is now extending this for the first time to more than 20 companies who have already signed up to get documentation and technical support from Microsoft under an EU program.
In March 2004, the EU levied a record $613 million fine against Microsoft.
It also ordered the company to share technical information with rivals for a reasonable fee and offer a version of Windows without the Media Player software for what the court saw as an abuse of the company's dominant position in the industry.
Microsoft, based in Redmond, Wash., is appealing the ruling and the case will be heard in late April by the European Court of First Instance, the EU's second-highest court.
Smith told a news conference he was "confident" of winning the case, saying the world had moved on since the EU opened its antitrust investigation eight years ago. He cited the popularity of Apple Computer Inc.'s iPod music player and its iTunes music software.
"If anything it is clear that there are more opportunities for competitors today than there were a few years ago," he said.
In December, Microsoft said the EU Commission was trying to undermine its Windows operating system with ever-more-drastic demands for technological transparency, and that it would contest the measure under EU law.
Todd said this was untrue. "We are not moving the goalposts as has been suggested," he said. "We are not changing our demands."
"The Commission's position is that Microsoft is obliged to comply with the remedies imposed in the Commission's March 2004 decision — nothing more, nothing less."
Todd stressed that the final word on whether Microsoft is meeting the terms of the EU antitrust order "rests in the first place with the Commission and not Microsoft."
Microsoft claims the EU demands on opening up its software specifications would also open the door to the cloning of the company's core product, the ubiquitous Windows operating system.