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RealTime IT News

Microsoft Protocol Changes 'Stingy'

Under pressure from the Department of Justice, Microsoft Friday announced revisions to its licensing agreements for some protocols within its Windows operating system.

The changes stem from an August 2002 antitrust settlement with the DOJ, which is monitoring the software vendor's antitrust consent decree. Also as part of the antitrust settlement, Microsoft has settled individually with ten states, offering Windows purchasers coupons good for rebates on any hardware or software product. The consent decree requires the company to license its Windows protocols on reasonable and non-discriminatory terms.

The Redmond, Wash.-based company said it is making some 20 protocols available without charge, making other protocols that perform particular tasks available for a fixed fee or fixed fee per unit, and changing the evaluation program to give prospective licensees samples of the technical documents with no confidentiality restrictions. The company said the changes are part of Microsoft's Communications Protocol Program (MCPP).

Company spokesperson Jim Desler acknowledged that the changes are in response to feedback from the DOJ, but said it is also simplifying its structure in part to make its "licensing easier and more attractive." Desler said the changes were not unusual.

"This is an unprecedented and complex program," he said, "and one in which we've made changes before -- and we continue to get feedback and make changes."

Jupiter Research analyst Joe Wilcox Microsoft called the changes "somewhat stingy."

"From what little Microsoft has revealed about the changes, I would consider them a step forward that falls short of the leap detailed in the last week's legal filing," Wilcox said in his daily blog. "Consider that the flat fees will be implemented for less than half of the tasks for which the protocols are licensed."

Wilcox said more changes might come as the European Union wraps up its five-year Microsoft antitrust investigation this year.

"The case there is all about servers, with allegations Microsoft uses its dominance on the desktop to gain advantage unfairly in the server market," Wilcox said. "Microsoft's ongoing problems with the communications protocol program are great fodder for company critics in Europe. I advise Microsoft to play softball before the European Union's Competition Commission plays hardball. In fact, I'm appalled the company doesn't take the risk more seriously."

Microsoft has been criticized for its complex licensing agreements, for these protocols and other products.

"Licensing at Microsoft is exceptionally complicated, and the answer to any question is usually, 'It depends,'" said Matt Rosoff, an analyst with Directions on Microsoft. To date, only 11 companies have licensed the communications protocols.

While 11 isn't a lot, it's better than six months ago, when there were only four licensees. After Microsoft made changes in the terms, an additional seven licenses were signed, Desler pointed out. In a statement, Microsoft said it is in discussions with more than 20 additional potential licensees.

"We feel changes we made in the licensing program created more interest, and we've been promoting it," he said. "There was some feedback in terms of the complexity of the terms and what have you, so we tried to make it simpler.

"[Licensing these protocols] is just one of many ways that companies can achieve interoperability with Windows," he added. "They can develop their own technology or use industry-standard protocols built into Windows. It's up to developers to determine whether they need these."

The changes include:

  • A new royalty model for six of the 14 tasks. For the proxy/firewall task, Microsoft said it would now license for a flat fee. For five other tasks (collaboration server, multiplayer games, print/fax server, VPN and Web server), the license will be based on a flat, per-unit fee. The rest of the tasks will remain on a percent of revenue royalty basis, the percentages ranging from a low of 1 percent to a high of 5 percent for all the tasks combined.
  • Twenty communication protocols will be posted to the MSDN developer program Web site and will be available without charge. An executable license and technical documentation can be downloaded from the MSDN site. These protocols will be non-task specific and provide support for general network connectivity. These protocols were previously among the 14 tasks available for licensing in the MCPP.
  • Microsoft gave up the right to audit licensee's end users and instead granted a clear right to distribute code to another MCPP licensee on a royalty-free basis under a simplified process.
  • The company said it is in the process of reviewing the changes with the DOJ and the various States attorneys and expects to post the agreement soon.

    (Jupiter Research and this publication are owned by the same parent company.)