Microsoft Cuts Royalties in Europe

Microsoft agreed to obey key parts of a 2004 antitrust ruling upheld by EU appeals court, cutting royalties and handing information over to open source developers.

Microsoft Corp. agreed to obey key parts of a 2004 antitrust ruling upheld by an appeals court last month, EU regulators said Monday, cutting royalties for rivals and handing information over to open source developers.

EU Competition Commissioner Neelie Kroes reached the deal in a phone call with Microsoft CEO Steve Ballmer in the early hours of the morning, she said, adding that she hoped this "dark chapter" was over.

"As of today, the major issues concerning compliance have been resolved," Kroes said, but cautioned that Microsoft has ongoing obligations.

Kroes said she regretted that it took so long for Microsoft to comply, because consumers suffered a lack of choice for years as rivals were held back from developing better software.

"It is a victory day for the consumer ... not the Commission," she said.

If the software maker does not keep to the terms of the deal, competitors will be able to take the company to a British court to seek damages.

Microsoft has agreed to three substantial changes, according to the European Commission.

The company will now charge a one-time fee of 10,000 euros ($14,310) for companies that want "complete and accurate" technical information to help them make software compatible with Microsoft's Windows desktop operating system.

It will also allow that data to go to open source companies such as Linux, and will cut the price it charges for worldwide licenses -- including patents -- to less than 7 percent of what Microsoft originally claimed.

"The agreements will be enforceable before the High Court in London, and will provide for effective remedies, including damages, for third-party developers in the event that Microsoft breaches those agreements," the Commission said.

The EU's executive arm said it will soon decide if the software maker violated EU law by overcharging for interoperability information.

Regulators warned that Microsoft had further to go to comply with the 2004 ruling that found it guilty of monopoly abuse and ordered the company to share information with rivals, market a version of Windows without a media player and pay a fine of 497 million euros ($613 million).

Microsoft lost an appeal at the EU Court of First Instance on Sept. 17. It can appeal that ruling to the EU's highest court.

Kroes promised that computer users would soon see real benefits.

"The measures that the Commission has insisted upon will benefit computer users by bringing competition and innovation back to the server market," she said. "I have always said that open source software developers must be able to take advantage of this remedy: now they can."

Microsoft controls some 95 percent of the software running on desktop computers in offices and homes and has a 70 percent chunk of work group server software that control how a group desktops access each others and transfer tasks to printers.

Open source server software is now "virtually the only alternative for users and are thus the main surviving competitive constraint on Microsoft," the EU said -- and handing over the technical information on Windows should offer consumers better products at better prices.

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