News

Microsoft, EC fail in antitrust settlement talks

• By Jack Vaughan
• March 19, 2004

UPDATED - Mar 19, 2004; 7pm EST - Microsoft representatives, led by company CEO Steve Ballmer, have failed to reach settlement with the European Commission (EC) on antitrust charges facing the Redmond, Wash.-based software giant.

Last year, an EC probe concluded that Microsoft's Application Programming Interfaces (APIs) were not sufficiently interoperable with competitors' offerings in the low-end server and PC areas, and that the company tying Windows Media Player to the Windows PC operating system was weakening competition.

EU Competition Commissioner Mario Monti said next week he would propose that the full commission formally endorse the position that Microsoft is improperly stifling competition.

Both sides said progress had been made in a recent spate of meetings. The apparent stumbling point was proposed limits on Microsoft's behavior in the future.

"I believe we reached agreement on the issues of the case," Microsoft's Ballmer said in a statement, "but we were unable to agree on principles for new issues that could arise in the future."

Competition Commissioner Monti agreed. He issued a statement that said: "We made substantial progress towards resolving the problems which have arisen in the past but we were unable to agree on commitments for future conduct."

The Commission is now expected to assess fines and push for more disclosure of key Microsoft APIs to hardware server manufacturers.

Even if the ruling does stand and the proposed fine and remedies are imposed, Microsoft's business won't be badly affected, wrote Gartner Inc. analyst David Smith in a recent commentary on Gartner's Web site.

An anticipated fine on the order of $3.5 billion is in line with Gartner's earlier predictions, according to Smith. Others are expecting a penalty in the $200- to $300-million range.