Microsoft Must Prove Innovation, Says EU

The European Union's antitrust boss said Tuesday that Microsoft can't charge licensing fees for its source code unless it proves the programming is "innovative," the latest to-do in the long-running hullabaloo between Europe's governing body and the American developer.

Last week, Microsoft said it would license the source code to some portions of its Windows Server Workgroup software to competitors as a way of meeting the European Union's (EU) demand for more and clearer documentation on the protocols covered by the EU's 2004 antitrust decision. Brad Smith, Microsoft's chief lawyer, said last Wednesday that the source code "is the ultimate documentation" and should satisfy the EU.

Not so fast said the EU. Not only did the body's European Commission not request source code, but according to the Wall Street Journal, it had expressly warned Microsoft in December that access to the source code wouldn't solve its problems.

According to documents that the Journal reviewed, the EU said in its official Objection that "it must be underlined that it is not necessary to reveal the source code."

Shortly after the Microsoft announcement last week, the EU's antitrust commissioner, Neelie Kroes of the Netherlands, said she was surprised by the Americans' move, but declined further comment.Tuesday, Kroes told a parliamentary committee of another stumbling block: Microsoft must prove that the communication protocols in question must be innovative if the company wants to charge others to see them.

"If no such innovation... no remuneration can be charged by Microsoft," she was quoted by the Journal as telling the committee.

The issue's in flux, if only because Kroes' commission on competition has not yet received a proposal from Microsoft. "We are still waiting," said her spokesman, Jonathan Todd, Wednesday from Brussels.

And the ball is really in Microsoft's court, not the EU's, he added. "It is up to Microsoft to explain how, and why, this new idea addresses the Objection submitted in December," he said.

The Objection filed by the commission charged Microsoft with not properly documenting the protocols, and said it would start fining Microsoft up to 2 million euros ($2.42 million) a day, backdated to Dec. 15. Microsoft is contesting the fine, and hopes that the source code licensing idea will meet the EU's approval.Todd wouldn't elaborate on the definition of "innovative," but backpedaled a bit by saying that contrary to Kroes' quoted remarks, the final decision on what, if anything, Microsoft would be allowed to charge has not been finalized.

"I really think that they're getting into the minutia here," said Matt Rosoff, an analyst with Directions on Microsoft.

And he said Microsoft has reason to push back at the EU on pricing.

"I don't think Microsoft is worried so much about 'free' as in 'free beer,'" he added, "as it is about 'free' as in once its source code has been incorporated in, say, an open-source project, that that code will be forever after considered 'free' to all.

"That's the main thing that Microsoft is trying to prevent, the incorporation of its source code in open-source," Rosoff said. "Would Microsoft have [legal] recourse if that's happened? I don't know. I don't believe that the GPL has ever been tested in a court."In other developments, investigators from Kroes' antitrust commission met with Microsoft officials this week on the developer's Redmond, Wash. campus, Todd confirmed. He also said that the meeting was scheduled more than a month ago, and is not an emergency confab meant to focus on the source code announcement of last week.

Among those meeting with Microsoft was British computer scientist Neil Barrett, a monitoring trustee appointed by the EU to ensure that Microsoft complies with the antitrust ruling. Barrett was selected in October 2005 from a list submitted by Microsoft.

In the December Objection, the commission said that Barrett was unable to make progress on simple programming chores for the protocols in question using the documentation Microsoft provided. He and a partner spent some 42 hours on the chore without any luck.

Last week during a press conference, Microsoft's Brad Smith took issue with Barrett's dissing of the documentation, and thus with his report, which provided the foundation for the commission's Objection.

"The trustee said that he had undertaken a project to try to create the implementation for one of these protocols, and he tried over the course of four days to establish such an implementation, and he was not able to do so," said Smith."Well, the reaction of our engineers was that even our best engineers couldn’t have accomplished that in only four days. It took us years to create this technology. It is not something for which any important piece can be replicated by anyone else with just four days of work. It’s going to need a team of engineers, even with access to all of this information. And it’s going to take a good deal more than four days for anybody to succeed. That just can’t be the right test."

Microsoft faces a Feb. 15 deadline for replying to the December Objection.