European Commission rewards Microsoft for playing nice

Brussels (Belgium) – The European Commission (EC) today said that it will recall a full time monitoring trustee watching Microsoft as Microsoft’s competitive behavior has improved for the better.

Mentioning the EC and Microsoft in combination with the phrase “good news” is something we thought would be impossible for a very long time. But Microsoft indeed received some praise and good news from the EC today and we believe that at least some Microsoft executives around the globe are taking a deep breath.

The Commission said that “In light of changes in Microsoft’s behavior, the increased opportunity for third parties to exercise their rights directly before national courts and experience gained since the adoption of the 2004 Decision, the Commission no longer requires a full time monitoring trustee to assess Microsoft’s compliance. In future, the Commission intends to rely on the ad hoc assistance of technical consultants.“

The EC fined Microsoft in March of 2004 497 million Euros, or almost $700 million, for charging “unreasonable prices” for access to interface documentation for work group servers. The EC found that Microsoft had abused its dominant position under Article 82 of the EC Treaty. According to the decision, Microsoft was required to disclose interface documentation, which would allow non-Microsoft work group servers to achieve “full interoperability with Windows PCs and servers at a reasonable price.”

According to the EC, Microsoft initially demanded a royalty rate of 3.87% of a licensee’s product revenues for a patent license and 2.98% for a license giving access to the secret interoperability information (information license). In May of 2007, the company reduced its royalty rates to 0.7% for a patent license and 0.5% for an information license for sales within Europe, while leaving worldwide rates unchanged.

In October of 2007, Microsoft began providing a license for access to the interoperability information for a flat fee of 10,000 Euros and an optional worldwide patent license for a reduced royalty of 0.4 % of the licensees’ product revenues.

Microsoft appealed the initial EC decision, but the charges and fine was upheld through a ruling of the European Union’s Court of First Instance (CFI) in September of 2007. In February of 2008, the EC fined Microsoft an additional 899 million Euros or $1.35 billion for non-compliance with the Commission’s March 2004 decision.

It is believed that Microsoft’s “interoperability principles”, announced in February of 2008, have played a big part in the EC’s decision to drop full-time monitoring of Microsoft’s activities. According to those principles, provides more information which is promised to enable developers to connect their software to Microsoft’s high-volume products just like Microsoft does.

However, the EC said that it will not entirely drop its monitoring of Microsoft. Instead, the organization will rely “on the ad hoc assistance of technical consultants.”