MS ANTITRUST – Microsoft attacks EU server-code ruling

Microsoft Wednesday attacked the most contentious part of the European Commission’s 2004 antitrust ruling against it — the decision to force the company to share details of server source code.

As part of its appeal against the ruling, Microsoft warned judges at the European Court of First Instance in Luxembourg that failure to annul that part of the ruling would be a “recipe for disaster” for intellectual property protection in Europe.

The 2004 ruling ordered the company to open up source code for server communications protocols to rivals, in order to allow them to build server programs that work as smoothly with Windows as Microsoft’s own software.

Microsoft said Wednesday that only in exceptional circumstances can antitrust law trump intellectual property law. Microsoft argued that the Commission failed to provide such an exception.

Regulators can force companies to reveal intellectual property such as patents, copyright and trade secrets, if the information they protect is indispensable to the working of the market.

Ian Forrester, Microsoft’s top lawyer arguing the server side of the case, said that Linux’s 11% market share of the workgroup server software market in 2004 is proof that the information the Commission was ordering Microsoft to reveal is not indispensable, because Linux servers don’t require it to compete.

David Evans, a visiting economics professor at University College, London, and one of Microsoft’s key witnesses, took issue with the Commission’s definition of the server market. The workgroup server market was worth $5.9 billion in 2004, while the whole market for servers of all kinds was worth $53 billion, according to figures Evans cited.

Microsoft had a 72% share of the narrower market, but only a 33% share of the whole market, according to figures cited in Evans’ presentation. By focusing on the narrower market the Commission was making “a gross overstatement of Microsoft’s market share,” he said.

Microsoft officials insisted that there is no interoperability problem between the Windows operating system and rivals’ servers.

“Interoperability is commonplace. It is very easy for Windows XP client software to interoperate with non-Windows servers,” said John Shewchuk, a Microsoft engineer. But he drew a distinction between broad interoperability and the ability to tightly link servers from different vendors into certain kinds of distributed computing systems.

“You can’t drop a Sun Microsystems server into a Novell system,” Shewchuk said. “Just because they can’t replace each other within a single server unit doesn’t mean that they are not interoperable.”

Sun, whose complaint about interoperability in 1998 sparked the European antitrust case, cannot expect to be allowed access to the protocols that would give it access to server systems running Microsoft’s Windows because “this would amount to allowing Sun to build Windows server systems,” said Tom Brookes, a Microsoft spokesman.

The European Commission and its allies will counter Microsoft’s arguments on the server part of the case in the afternoon. Thomas Vinje, a lawyer in the Brussels office of law firm Clifford Chance, which represents the European committee for interoperable systems, a Commission ally, brushed off Microsoft’s presentation.

“There was nothing innovative in it,” he said.