RealTime IT News

U.S. Backs Microsoft in EU Dispute

By the end of the second day of Microsoft's hearings before the European Commission, there was an air of finality.

"The impression is a decision has already been made," one source who attended the closed-door meeting and who has been involved in the antitrust case since the beginning, told internetnews.com.

Meanwhile, Brussels officials did not take seriously a last-minute U.S. government memo delivered to European regulators, according to another source.

The memo said the government had "substantial concern" over the way Microsoft was treated by European regulators, according to the New York Times.

EU spokesperson Jonathan Todd confirmed to internetnews.com that the memo arrived Tuesday following a meeting between U.S. diplomats from the American Mission and aides of EU competition commissioner Neelie Kroes on competitiveness.

He said the memo's subject was the Microsoft case.

Microsoft had no comment, according to Dirk Delmartino, the software company's EU communications director. A U.S. State Department spokesperson, after saying she would investigate, did not get back to internetnews.com by press time.

The hearings, which began yesterday, are designed to assist the EU in determining whether Microsoft had complied with European requirements the software company provide rivals technical documentation.

At stake is $2.4 million in daily fines. In a series of claims and counter-claims, Microsoft has questioned the regulators' ethics, and an independent technical expert described Microsoft's documentation as worthless.

Despite a gag order enforced on participants since Thursday, word has leaked out about a desire to cooperate. Neil Barrett, the U.K.-based independent computer expert, now favors a settlement rather than continued charge and counter charges, according to another source.

Microsoft is resigned to the EU levying heavy fines, but feels it has been able to get its case heard.

"While I can't comment on the specifics of the hearing, I will say this: We had a very constructive dialogue yesterday," Brad Smith, Microsoft's legal representative, said in a statement. "In fact, I wish we could have had this type of dialogue sooner." Smith said he felt optimistic Microsoft can resolve the issue with the EC.

Today's testimony kicked off with a video statement by Dave Sommer, an expert with the Computing Technology Industry Association (CompTIA) trade group. He described the technical information Microsoft supplies to rival companies as "comparable to, or exceeds" documentation used throughout the software business.

"CompTIA has long argued that the EC's five-year-plus antitrust action against Microsoft is unwarranted," according to a statement.

In the past, CompTIA sided with Microsoft during its defense against the U.S. government and supported Intel in a 1999 patent dispute.

Lars Liebeler, CompTIA's antitrust counsel, called the EU's demands not in the best interest of the IT industry. Europe and other countries considering action against Microsoft are "creating a patchwork quilt of regulations," Liebeler told internetnews.com.

The attorney, who will attend next month's appeal of the original EU decision, hopes the case will be dropped.

"I hope the court can be convinced they are not letting Microsoft go scot-free," he said. Microsoft has altered its behavior based on the consent decree with the Justice Department, according to Liebeler.

The antitrust regulation must be changed. "Today it's Microsoft; tomorrow it's another company," he said.

Yesterday, a group of six companies testified that the Microsoft Communications Protocol Program licensing allowed them to create software that interoperates with the Windows operating system.

Although the EU has imposed a gag-order on the proceedings, Microsoft used the companies' statement to call for "clear, concise and consistent" instructions from the EU.

The CompTIA statement came amid reports the U.S. government is weighing in on the side of Microsoft. In the memo, unknown U.S. officials wrote of "substantial concerns" surrounding Microsoft's treatment by European regulators.

The U.S. government involvement may help Microsoft.

"Right now it is Microsoft against the EU, and that is a huge imbalance," Rob Enderle, principal analyst with the Enderle Group, said.

Thursday, Enderle told internetnews.com Microsoft needed the government's clout.

"If the U.S. steps in, it is government to government and a bilateral result becomes possible, one that may actually address the real problem, which isn't that the EU doesn't have enough money; that is a problem but not really Microsoft's to solve."

In light of U.S. involvement, fining Microsoft could be viewed as Europe imposing tariffs, creating reason for strong concern, according to Enderle.