The European Commission (EC), the administrative body that enforces fair competition laws for the European Union (EU), has fined Microsoft 280.5 million euros (US$357 million) for insufficiently documenting communications protocols used by Windows clients and servers. Further fines could follow if the EC continues to find Microsoft's documentation inadequate. The EC also announced it is looking closely at possible antitrust violations in Windows Vista.

Separately, a U.S. judge dismissed an antitrust case filed by the founder of Go Computing, a company that sold pen-computing technology in the early 1990s. Microsoft also faces two new lawsuits alleging that its Windows Genuine Advantage feature is spyware (see "July 2006 Security Updates").

Dispute over Documentation

The EC's latest fine stems from its Apr. 2004 antitrust ruling against Microsoft. In that ruling, the EC fined the company 497 million euros (US$613 million), ordered it to release a version of Windows without the Windows Media Player to OEMs in Europe, and ordered it to document Windows communications protocols necessary for third-party software to interoperate with Windows clients. Microsoft appealed that ruling to the Court of First Instance, but a judge ordered that the company must comply while the appeal is pending.

Microsoft paid the initial fine and, after some minor disputes, successfully met the EC's demand for a version of Windows without the Media Player. However, the company and the Commission have sparred repeatedly over the requirements for the communications protocols. The EC claims that the documentation Microsoft created is insufficient for its intended purpose—enabling third-party server software, such as Samba (open-source file and print software), to equal Windows Server in its ability to interoperate with Windows client PCs. Microsoft claims that it has done its best to comply, but that the EC's requirements were not clear. There may be other factors in play, however: in a prior hearing in the case, Microsoft expressed concern about allowing open-source products to incorporate Microsoft intellectual property for fear that this would reduce Microsoft's control over its inventions.

In June 2006, the EC fined Microsoft for noncompliance with the documentation requirements. The fine amounts to 1.5 million euros per day for the period from Dec. 15, 2005 (when the EC first threatened Microsoft with daily fines), to June 20, 2006 (the cut-off date for compliance). This is less than the maximum threatened fine of 2 million euros per day, but EC Commissioner Neelie Kroes warned that the maximum fine could increase to 3 million euros per day starting July 31 if the EC continues to find Microsoft's documentation wanting.

A resolution appears likely before that time. In a statement decrying the fine, Microsoft lead counsel Brad Smith claimed that the EC had given Microsoft clear requirements only in Apr. 2006. Since then, according to Smith, Microsoft has met all six of the EC's milestones, and the company now has 300 people working full time to meet the EC's next deadline of July 24. While Kroes said she did not believe Microsoft's claims of misunderstanding, she also said that the company's recent work on the documentation had been good, pointing the way toward a resolution.

Microsoft has appealed the July 2006 fine in addition to appealing the original EC ruling.

Meanwhile, the EC also notified Microsoft that it will monitor Windows Vista for possible antitrust violations, with a particular focus on the following areas:

• The use of built-in Windows security features, such as the Security Center, to promote Microsoft security products (e.g., OneCare) over competing products from McAfee, Symantec, and other security and utilities vendors
• Search functionality in Internet Explorer 7 that might favor Microsoft's Windows Live Search site over competitors such as Google Search
• Built-in support for XML Paper Specification (XPS), Microsoft's nascent document layout specification that will compete against Adobe's popular Portable Document Format (PDF)
• Information necessary for third-party server software to interoperate with Vista.

Go Suit Dismissed

U.S. District Judge Frederick Motz, who is overseeing private antitrust lawsuits against Microsoft in the United States, dismissed an antitrust suit filed by Go Computing founder Jerrold Kaplan in July 2005.

In the suit, Kaplan alleged that Microsoft used its monopoly power in the OS market to discourage investment in Go and to coerce hardware makers such as Compaq and Fujitsu to avoid Go's PenPoint OS, which Microsoft supposedly viewed as a threat to Windows. Go was acquired by AT&T in 1994 and shut down shortly thereafter. Kaplan claimed that evidence supporting his claims was revealed during a class-action antitrust lawsuit filed by consumers in the state of Minnesota (Microsoft settled that case after trial).

Motz dismissed the suit because of the four-year statute of limitations on federal antitrust claims.