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Redmond Hold-'Em

News item: The European Commission has criticized Microsoft's effort to comply with the antitrust settlement that requires the company to open up its server software to third parties, and has threatened fines if Microsoft doesn't address those concerns quickly.

Microsoft is dragging its feet on a legal decision against it?!? Stop the presses! Now, where have we heard this before? In reality, this is what having a $60 billion cash hoard will do for you. You and I would regard a court judgment as, well, a court judgment; follow the decision entirely and promptly, or go to jail or something. For Microsoft, it's more like the opening ante in a game of Texas hold-'em. "That's what they told us to do? OK, let's try this out and see if it flies.....it didn't fly? They're fining us? OK, whatever." C'mon, what could you possibly fine Microsoft that would affect its operations? $5 million per day is the figure that the EC is tossing out, and that isn't chump change, but Microsoft could absorb that for at least a short time while it mulls its next move.

Which brings us to the "let's be fair to Microsoft" portion of today's blog. For one thing, the company certainly believes that it's made a good-faith initial effort to comply with the EC directive. For another, the server licensing procedures the company has proposed aren't anywhere near as contemptuous of the EC decision as some of Microsoft's other gambits (for instance, responding to the directive to unbundle Windows Media Player and let other media competitors into the Windows ecosystem by taking it out of Windows and calling the resulting Windows XP release "Reduced Media Edition," a name that apparently narrowly won out over "Let's Make Sure We Insult the EC Edition"). A company spokesperson has said that Microsoft will make every effort to address the EC's concerns on access to the server protocols, and don't be surprised if that really does happen; Microsoft will eventually make itself a good deal of money by complying.

The real guts of the current gap between the initial Microsoft proposal and the EC directive is the effect that Microsoft's proposed licensing requirements have on open-source developers, and the licensing fee that Microsoft has aimed to charge. Look for the latter to come down: The EC will insist that the terms make it easy for smaller companies to play, and it's the easiest place for Microsoft to give ground on this dispute. Indeed, Microsoft has already moved in response to the EC criticism to expand its program for sharing Windows source code throughout Europe. What will be more interesting to watch is whether they address the open-source contingent whose filings the EC have mainly prompted this episode. Microsoft's hostility to the GPL is huge, and it's hard to see any common ground between Redmond and the Free Software Foundation. We may actually see NHL hockey resume before this one gets settled.