Europe threatens Microsoft with swinging fines

The European Union has threatened to fine Microsoft up to $2.36m(€2m) a day for failing to obey its 2004 antitrust ruling, saying the software giant was proving intransigent about sharing data with competitors.

Microsoft responded that 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.

The EU head office took new legal steps against Microsoft yesterday aimed at forcing Microsoft to provide better documentation so its software programs can be used with competitors’ products. Microsoft has until January 25 to answer the complaint.

“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,” EU Antitrust Commissioner Neelie Kroes said.

Microsoft said, however, that the commission’s latest 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.

On top of that, Microsoft said that the EU Commission and a trustee monitoring the case had failed to take proposals it made last week fully into account before taking the action. No details of the Microsoft proposal were immediately available.

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 yesterday issued a formal “statement of objections,” a measure that could lead to the hefty daily penalties that would be backdated to December 15.

The EU Commission said it based its decision on a report of the monitoring trustee of the 2004 agreement which said Microsoft’s concessions were insufficient so far.

Meanwhile, Microsoft said late yesterday that it had reached a settlement with rival Google and former employee Kai-Fu Lee, ending a legal battle that had exposed behind-the-scenes rancour between the companies.

In a statement, Microsoft said the three parties had entered into a “private agreement that resolves all issues to their mutual satisfaction.”

Lee had worked at Microsoft since 2000 and helped develop its MSN Internet search technology, including desktop search software rivalling Google’s. He left in July to lead Google’s expansion into China after Google offered him a $10m (€8.4m) compensation package.