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Record fine against Microsoft upheld by European Court of Justice

The European Court of Justice has ordered Microsoft to finally pay a record fine for using its near-monopoly position on the desktop to keep rivals out of the workgroup server market. Four years ago, the European Commission slapped the software giant with a fine of 899 million Euros for its anticompetitive behaviour. In today's ruling, the ECJ ruled that this unprecedented fine was largely justified.

For a decade, the Free Software Foundation Europe has participated in the case, also on behalf of the Samba team, which provides a Free Software workgroup server competing with Microsoft's proprietary product.

"Microsoft remains a convicted monopolist, and was reduced to negotiating the terms of its punishment," says Karsten Gerloff, President of the Free Software Foundation Europe. "The court has reduced the fine by less than five percent. The European Commission was right in being tough on Microsoft. We have worked hard to support the Commission in this case, and are extremely proud of the victory we've achieved. We are grateful for the Samba team and all the others who invested so much effort along with us, and hope that the Commission will continue to push for an open, competitive IT market."

The case shows that Microsoft has used patents as an excuse to not reveal their mundane changes to public protocols. The court recognised that the company was wrong to refuse to give access to the interoperability information unless a party took a license for patents too. This is an example of how software patents are a real and present damage to competition even if used out of court.

"We have successfully asserted the rights of Free Software developers like the Samba Team to access interoperability information, but Microsoft refused our legitimate demands until the very end," says Carlo Piana, General Counsel for the Free Software Foundation Europe. "Today's decision establishes that we were right once again. Receiving the interoperability information was our right, not a concession by Microsoft."

The threat to competition has not disappeared. Microsoft still attempts to bring increasing parts of the technology market under its control, and other companies such as Apple are following its lead. The company still uses patents to put rivals under pressure and profit from their work. It also uses new approaches to restrict device owners from installing software of their choice on their hardware. To counter these threats the Free Software Foundation Europe will continue to work for a free information society, and for the interests of Free Software users and developers everywhere.

Background

After the 2004 decision of the European Commission was upheld by the General Court of the European Court of Justice, in 2007 Microsoft finally complied fully with the provision to release timely and accurate interoperability informations with competitors under so-called "Reasonable And Non Discriminatory (RAND)" conditions.

After Microsoft did not fulfil the Commission's requirements, the Commission finally set the fine for noncompliance to EUR 899 million, assessing that up and until October 2007 Microsoft fell short of its obligations to offer RAND conditions.

Microsoft contested this assessment and appealed to the European Court of Justice. The company claimed that because the information contained in the release of the information was covered by patents – and thus innovative – it was entitled to charge rivals substantial amount of money for access to this information. Not having received sufficient guidance, it was within its rights to set a high price for interoperability information, and in good faith charge running royalties even for the "trade secret" part, which was from the license for patents upon express request from the Commission.

FSFE and the Samba Team (which is a licensee of the interoperability information, or "WSPP", through the Protocol Freedom Information Foundation) intervened in the case to deny that the information was "innovative". The only value attached to the information was to allow a drop-in replacement of network services to be created through the discovery of trivial details of the protocols. Whereas the general concepts, structure and engineering decisions were both well understood and not ground-breaking if taken individually, nor was the idea of combining them new or innovative. The Court upheld the finding of the Commission, finding that: "Microsoft in practice continued to refuse Free Software developers all access to the interoperability information, which was not something that the letter recognised it could legitimately do."

Contact

Karsten Gerloff
President
gerloff@fsfe.org
+49 176 9690 4298

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