Microsoft-EU showdown draws to a close

[Dreamer128]

The EU's competition watchdog was thrown on the defensive Tuesday as top EU judges sought to determine if Brussels was wrong to fine US software giant Microsoft half a billion euros two years ago.

On the second day of a week-long trial, Judge John Cooke fired questions at both sides in his Luxembourg courtroom, as the case narrowed down to the tough technical arguments at the heart of the high-stakes standoff.
Both legal teams delivered their arguments smoothly on the opening day, but the commission struggled with Cooke's questions Tuesday, although lawyers on its side regained their composure later in the day.

Lawyer Thomas Vinje, who is representing Microsoft's industry rivals, took the commission's difficulties in his stride and insisted that "both sides took a battering" under the barrage of questions from the judges.
Microsoft has asked the European Union's second-highest court to hear the case in the hope that they will overturn the European Commission's 2004 anti-trust ruling against it.

After a five-year investigation, the Commission took its biggest competition decision ever in March 2004 when it found that Microsoft had broken EU law by using a quasi-monopoly in personal computer operating systems to thwart rivals.

In addition to fining Microsoft 497 million euros (612 million dollars), the EU ordered the company to sell a version of its Windows operating system without its Media Player software and to divulge information about Windows needed by makers of rival products.

The focus of the first two days at the trial has been on whether or not Microsoft's practice of including Media Player software in the ubiquitous Windows thwarted competitors with rival media programmes, as Brussels insists.
"How can you compete with ubiquity?" stressed commission lawyer Per Hellstrom.
Cooke, a 62-year-old Irish judge, wanted to know whether or not Media Player was an independent application programme or an integral part of Windows, as Microsoft claims.

"Microsoft itself calls (Media Player) an application. Why does it call it an application if it's an integrated" part of Windows, he asked.
As the trial progresses over the week, judges are to look at whether Microsoft has stamped out competition by withholding key Windows computer code from rivals and whether the commission's fine is excessive.

The 13 judges hearing the case are not expected to come out with a ruling, which can be appealed, until the end of this year at the very earliest as they sift through the technical details and complicated arguments.
Microsoft, which has hired former EU judges to rehearse for the trial, appeared well-prepared as its legal experts and executives fielded tough questions.

Despite a strong showing on the first day, the commission's Hellstrom appeared less at ease Tuesday morning, hesitating and stumbling at times in answers to judges' questions.

On Microsoft's side, the company is counting on its legal chief Brad Smith to coordinate the closely choreographed appearances of its 60-strong team of lawyers, computer experts and executives.

No stranger to showdowns with competition regulators on both sides of the Atlantic, Smith lived up to his reputation as a smooth operator, keeping his public statements on the margins of the trial to crisp but uncompromising soundbites.

Even on the commission's side of the courtroom, Smith has earned respect with one lawyer describing him as "very, very brilliant".

(Source: EUBusiness)

[ 04-28-2006, 04:58 PM: Message edited by: Dreamer128 ]

[Hivetyrant]

Once again, it should make for an interesting battle, and I see Microsoft is attempting to stop this sort of thing from happeneing in the future with its various versions of Windows Vista (8 versions for 32-bit and 8 versions for 64-bit [img]tongue.gif[/img] )

[shamrock_uk]

I think that's more a case of discriminatory pricing (to maximise profits) rather than an attempt to comply with the EU.

I can't remember the story exactly, but a couple of weeks ago MS were set back by a US judge that basically told them to cooperate with the EU.

It's an interesting case, largely because they're guilty as hell. The list of Microsofts' anti-competitive behaviour is long, distinguished and fairly uncontroversial - finding a suitable sanction is very difficult and really quite an interesting challenge.

We can't (and shouldn't!) force Microsoft to release its source code in my opinion. It should be every software companies right to keep its source closed if it wishes.

Rather than insist that Media Player is stripped out in some versions**, I feel it would be better to insist that they adopt open formats (and by that I mean properly open, not officexml) and use open APIs where necessary. These could either be developed in cooperation with other big players or simply released by MS. There's no need to strip Windows bare - simply stop them from blocking other competitors from competing.

What must be addressed is the previous MS tactic of simply 'waiting out' the lawsuits for anti-competitiveness, stalling and delaying with its mountain of lawyers then making a settlement two or three years after the fact. Of course, by this time the competitor has been largely forced from the market. If the EU does anything concrete and constructive to punish MS, I think this should definitely be near the top of the list.

For those unfamiliar, I find this site to be a pretty decent and level-headed account of Microsofts failings. It also has a specific section on business practices.


** Incidentally, MS are rather cunningly using the lack of demand for this version as evidence in this trial - they say that as there have been hardly any sales of WinXP sans Media Player that they can't have behaved improperly - failing to supply a product which nobody wants cannot amount to anticompetitiveness. This is one of the reasons that I think the EU is barking up the wrong tree in their approach to this (although I think they should be commended for tackling the issues).

[ 04-26-2006, 11:02 AM: Message edited by: shamrock_uk ]

[Timber Loftis]

You know, if MS had not made windows with an integrated application for playing video and voice, we'd be bitching about that as well. I mean, wtf?

[pritchke]

In defense of Microsoft I believe Windows Media Player can be uninstalled and Windows can run fine without it so it would qualify as an application. I have not tried to uninstall it from XP so I am not sure if that is the case anymore.

Of course for the overall case I believe microsoft is in the wrong.

[ 04-26-2006, 04:28 PM: Message edited by: pritchke ]

[shamrock_uk]

Originally posted by Timber Loftis: You know, if MS had not made windows with an integrated application for playing video and voice, we'd be bitching about that as well. I mean, wtf?

But Timber, their bundling of video and voice is not the main issue here.

See the third day summary for what it's really about.

It's the deliberate obstruction of rival software - making their offerings appear to be broken - that they are on trial for. They have been leveraging their 95% desktop market share to ensure that competitors cannot enter the market effectively. The whole media player issue is merely one example of this happening, not the substance of the case.

IIRC you're not a great fan of large monopolistic corporations in general - the same rules should apply to monopolistic software companies. This kind of behaviour is just not in the public interest - the public benefit from choice.

[Dreamer128]

Outcome of Microsoft-EU trial uncertain as showdown draws to a close

Although EU regulators struggled to fend off a legal offensive from Microsoft during their anti-trust trial, the verdict was still out on Friday, the last day in the week-long showdown, over which way the judges would lean.

Microsoft requested the trial before the European Union's second-highest court in hope of showing that the EU's executive commission erred when it accused the company of abusing its mighty market power and fined the group 497 million euros (623 million dollars).

The trial holds huge stakes for both sides as a defeat would deal a devastating blow to the commission's authority as a competition regulator, while losing the case could mean Microsoft's would need to review its business model.

However, both sides will have to wait until the end of the year at the very earliest for the judges to make a decision because of the mass of technical detail and complicated arguments that they will have to pore over to make up their minds.

Even though EU commission's lawyers have stumbled over the course of the week in making their case, both sides agree that it is impossible to guess which way the judges will turn.

The roots of the trial go back to March 2004 when, after a five-year investigation, the commission took its biggest competition decision ever in ruling that Microsoft had broken EU law by using a quasi-monopoly in personal computer operating systems to thwart rivals.

In addition to slapping a record fine on Microsoft, the EU ordered the company to sell a version of its Windows operating system without its Media Player software and to divulge information about Windows needed by makers of rival products.

Although Microsoft has paid the fine, it has fought tooth-and-nail to resist corrective changes.

Keeping up its offensive, it argued on Friday that Brussels was in effect calling on the company to reveal valuable trade secrets.

Microsoft lawyer Ian Forrester stressed that the company's "products are the fruit of its intellectual efforts" and said that "trade secrets are not second class rights".

Fighting back, commission lawyer Anthony Whelan insisted that the case was not about intellectual property rights.

"We need to be prudent when we attribute value to secret information," he argued.

"The simple fact of commercial value cannot be the end of the story," the Irish lawyer added.

Lawyer James Flynn, who is represents several of Microsoft's big industrial rivals, stressed that the information the commission wanted Microsoft to publish had a value "because it furthers Microsoft's dominance".

On Thursday, the commission struggled to answer a question from Judge John Cooke when he asked about the value of such information was.

Despite Microsoft's legal assault on the commission's anti-trust decision, the commission is trying to force Microsoft to comply with the 2004 and has threatened fines of up to two million euros per day if it finds in the coming months that the company is not doing enough to meet the demands laid out in the landmark 2004 ruling.

(EUBusiness)

[shamrock_uk]

An interesting analysis from El Reg.

Bill Gates' letter to hobbyists (en Français, 2006) By Andrew Orlowski in San Francisco Published Friday 28th April 2006 11:56 GMT EU vs MS Comment European Court justice Cooke gave Microsoft's lawyers a tonic yesterday, by raising concerns about the transfer of Microsoft's intellectual property. But one shouldn't read too much into his intervention - the judge was playing devil's advocate. And the trouble for Microsoft is that it needs 12 more Cookes to spoil the European Commission's broth. Nevertheless, Cooke's elevation of the intellectual property issue will trouble both proprietary rivals and free software advocates alike. Arguing the moral rights of a property holder is comfortable ground for Microsoft - it would rather be staked out here than be trumpeting its bold record of innovation, or its congenial and co-operative reputation in the technology business. And the wholesale destruction of value caused by "volunteer" projects such as Craigslist, Wikipedia or "open source" software is certainly worthy of discussion, and should not be ducked. Craigslist is a business that poses as a non-profit, and by creaming off newspapers' classified profits, is hurting communities and shifting power to the middle-class and PC-literate by destroying what may be a community's only universally accessible media. Wikipedia is an ersatz "encyclopedia" that's industrialized the process of propagating unreliable information, and its only commercial value seems to be spammers, who scrape its keyword-rich content for junk websites. Free software doesn't deserve to be mentioned in the same breath as these ventures. Not only is it a historical continuity of the way much of our software infrastructure has been developed, but it has encouraged commercial value to built through service models, or dual licensing. It's a pity that open source and free software advocates, many of whom find such comparisons odious, haven't disowned them more strongly (http://www.theregister.co.uk/2005/10...ica_and_linux/). For when an influential judge lumps free software in with hucksters and hooligans, he's only citing what's he's reading in the New York Times, or our best and brightest think-tanks. This is the price we pay for having a witless and inattentive press - and a punditocracy too eager to grasp shiny new shapes or diagrams. The plot thickens, however. Especially when one considers the little-known fact that Microsoft has already offered to give away the source code to the protocols free software developers wish to work with, then we can see Microsoft's true intentions rather more clearly. It's an offer too good to refuse. What on the face of it looks like the moral high ground based on a defense of property rights, is really an artful strategy to isolate and punish free software. And on that basis, you can't fault Microsoft for inconsistency - it's a strategy that hasn't changed since Bill Gates' "Letter to hobbyists" in 1976. We'll explain. Microsoft's source code offer took place through back channels at the end of last year - but at least one document is on the public record - a strong and detailed rebuttal prepared by the Samba team. Samba is the long-running GPL project to create a set of interoperable Microsoft networking protocols. Samba includes proprietary operating systems as well as free and open systems, and forms the basis of embedded products. The mere fact that a free software project has rejected source code might surprise some, but only until you see the strings attached. And they're more shackles than strings. "The license proposal forbids you to run any binary that's based on the source code," Samba developer Volker Lendecke says. As the Samba submission to the commission pointed out, code that was potentially encumbered with patents would have required the Samba team to set up a clean room. "So having the ability to run source code, the complications rise tenfold. Really a bunch of new different problems," Lendecke says. So there's the issue of practicality. In 50m lines of source code, it's hard enough tell what's going on, let alone what patents might be lurking. Back in 2001 the dissenting states suggested forcing Microsoft to disclose its Windows source code to rivals - and we can understand why that idea found no interest. There's also another reason why a source code offer isn't all that it seems. In his 1984 paper "Reflections On Trusting Trust (http://www.acm.org/classics/sep95/)", the co-author of Unix Ken Thompson described a theoretical Trojan which could be salted away inside the compiler. It's a work of subtle beauty that deals with the transmission of knowledge without the transmitter being aware of the payload. That's something we're all experts on, whether we think very much about it or not. "No amount of source-level verification or scrutiny will protect you from using untrusted code," concludes Thompson. The relevance of "Reflections..." to this week's hearings is not to suggest that Microsoft has been so fiendishly clever that it may have rigged its compilers with an unknown payload - a feat which would require a level of foresight unknown at Redmond. But its to reinforce the general point that disclosure of the source code isn't the full story. Source code is not a holy grail of authenticity, but merely a set of instructions for other mechanisms to obey. The map is not the territory. In fact, all the Samba team want, according to Andrew Tridgell's testimony this week, is a floppy disk's worth (http://mail.fsfeurope.org/pipermail/...q2/000137.html) of Interface Definition Language descriptions. Another comment of Cooke's met with astonishment during calls to parties with an interest in the outcome of the case on Thursday afternoon. Cooke expressed skepticism that Microsoft's buy out of AT&T's AS/U, its Windows services for Unix, represented a "disruption of supply". AT&T had licensed the code to 11 vendors, including HP and Sun, to permit them to build Windows interoperability into their server offerings. (We can't stress enough that the European anti-trust case specifies a server-to-server remedy beyond the client-server remedy the US settlement outlined). The proof is surely in the consequences of this action. After Microsoft's cash settlement with AT&T, derivatives of AS/U such as Sun's PC NetLink withered on the vine. The only Windows interoperability project to gain any widespread industry momentum since its demise has been Samba, which is handicapped on several fronts. Did AS/U licensees - some of the biggest names in the industry - rationally decide that what their customers really wanted was worse Windows interoperability? Cooke seems to invite us to draw this conclusion. One must hope the other judges find this far-fetched. Asked what Samba really wants, the team told us "A fully specified protocol to the level of detail of an internet RFC, much like Sun's NFS v4 - that would be perfect." There you have it. Not such an intellectual property giveaway after all, is it? ® Related stories Judge Cooke questions EC settlement (27 April 2006) http://www.theregister.co.uk/2006/04...our_afternoon/ Judge Cooke turns up the heat on Commission (27 April 2006) http://www.theregister.co.uk/2006/04...dayfour_qanda/ Samba speaks as commission interveners cut in (27 April 2006) http://www.theregister.co.uk/2006/04..._four_morning/ Commission rejects MS server claims and demo (26 April 2006) http://www.theregister.co.uk/2006/04...ree_afternoon/ Microsoft talks up interoperability (26 April 2006) http://www.theregister.co.uk/2006/04..._ec_day_three/ Microsoft faces its Scopes moment (25 April 2006) http://www.theregister.co.uk/2006/04...lity_analysis/ When is an application not an application? (25 April 2006) http://www.theregister.co.uk/2006/04..._ms_questions/ Media Player summed up (25 April 2006) http://www.theregister.co.uk/2006/04..._vs_ec_daytwo/ Commission solves Windows XPN mystery (24 April 2006) http://www.theregister.co.uk/2006/04...crosoft_trial/ Linux zealots proud to be as miserable as planes (12 December 2005) http://www.theregister.co.uk/2005/12...ux_flyletters/ Why Wikipedia isn't like Linux (27 October 2005) http://www.theregister.co.uk/2005/10...ica_and_linux/

[ 04-28-2006, 08:06 PM: Message edited by: shamrock_uk ]

[shamrock_uk]

Just so y'all know it's not just a European thing, the US Department of Justice has just given Microsoft a good whipping over its poor compliance to their 2000/2 judgement.

Apparently out of 1,000 issues, 700 are still outstanding.

Linky.