Brussels (Belgium) – It has become a foregone conclusion that members of the European Commission, in what is being called a “debate” scheduled for next Wednesday, will levy a fine against Microsoft of €2 million per day back-dated to 15 December 2005, or about $538 million, for what it describes as its failure to provide documentation explaining how Windows can be made interoperable with other software, including other operating systems. Last week, an EC panel made up of representatives from all 25 member states voted unanimously to press on with fines; and this morning, the Commissioner for Competitiveness, Neelie Kroes, when asked by reporters in Berlin whether such a fine was imminent, responded, “I couldn’t imagine another way.”
Last March, it seemed the entire EC affair with Microsoft may finally come to an amicable close, as Dr. Neil Barrett, appointed by the EC as an independent monitoring trustee, unveiled a proposal that was met with favorable language from Microsoft general counsel Brad Smith, and others on his team. According to reports, as part of an agreement worked out with Dr. Barrett, three Microsoft engineers agreed to oversee the turnover of certain sets of protocols, in a seven-stage process that is likely to involve a team of hundreds of Microsoft engineers working up to 18-hour days.
The final milestone date under the Barrett agreement – which is apparently in place, if not formally enforced – is 18 July, during which Microsoft has said it will also hand over the final batch of protocol source code. Due apparently to a scheduling overlap which for some reason could not be resolved, next week’s debate will unfortunately take place on 12 July.
A few weeks ago, the US Justice Dept. acknowledged it was in exclusive talks with the EC regarding the substance of documentation Microsoft had turned over thus far to both governments, some of which overlaps. Due to rewrites ordered by the EC, much of the rewritten documentation has had to be subsequently turned over to the Justice Dept., contributing to delays in Microsoft’s efforts to comply with its US antitrust agreement. In its monthly status report on antitrust compliance, the DOJ states that Microsoft is now using the standards put forth in its agreement with Dr. Barrett, in rewriting documentation for both governments, and that this process has already begun.
“Altogether, approximately 259 Microsoft employees and contingent staff are involved in work on the technical documentation,” counselor Charles F. Rule wrote last month on behalf of the DOJ. “Of these, approximately 175 product team engineers and program managers are actively involved in the creation and review of the technical content of the documentation. In addition, there are approximately 27 full-time employees and 32 contingent staff working as technical writers, editors, and production technicians. There also are approximately 25 other technical architects, managers and employees from the Windows product development organization and the Competitive and Regulatory Affairs team who devote a substantial amount of time and effort to the technical documentation.” This team is personally overseen, Rule wrote, by Microsoft SVP Bob Muglia.
Speaking with the International Herald Tribune, competitiveness commissioner spokesperson Jonathan Todd admitted that the EC could decide to impose fines on Microsoft anyway, even if it meets its current commitments under the apparent Barrett agreement, for not having complied with EC demands in the interim period between 15 December and the date of the fine. But then Todd later admitted that a final decision on fines could conceivably be scheduled for as late as 19 July – one day after Microsoft’s final deadline for turning over source code.
While Microsoft would most likely appeal the ruling now being described as “inevitable,” such an appeal might not find an open slot on the calendar very soon, as Commissioner Kroes has vowed to turn her attentions to a sector-by-sector inquiry of the telecommunications industry in Europe, to determine whether companies may be colluding on pricing schemes, as well as “to determine whether things have developed as they should” in that industry.
Microsoft made its case before the European Court of First Instance in early March that it was denied access to secret documents involving meetings scheduled between the Commission, Dr. Barrett, and certain of Microsoft’s competitors. But a verdict in that case may come this October, at the earliest.
In a speech today in Bonn, Commissioner Kroes is quoted as saying the EC doesn’t shy away from complex cases. “The Microsoft case…shows that the Commission is not settling for issuing a decision,” Kroes said. “It is just as important that this decision has the desired effect on the market.” It will be interesting to learn who is in charge of determining what “the desired effect” is.