Microsoft under fire from the EU again

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Commission claims royalty prices are too high.

Microsoft has once again found itself in danger of running foul of the European Union. 

The European Commission has accused the company of not adhering to the terms of a 2004 antitrust settlement.  

The charges stem from a term in the 2004 ruling dictating that Microsoft must offer competing server makers access to interoperability code which would allow the servers to work with Windows-powered notebooks and PCs.

The 2004 case ended up costing Microsoft close to €500m, and European Commission spokesman Jonathan Todd told reporters in Brussels that the company could incur fines of hundreds of millions of euros for this latest transgression.

Microsoft contended that it had a right to charge fees to companies wishing to use the interoperability technology, which contains patented and unpatented technologies.

The company proposed that for a fee, vendors could have access to the interoperability components without having to pay a licensing charge for the patents.

The EU's view, however, was that there was little innovative technology worth charging for.

"Microsoft has agreed that the main basis for pricing should be whether its protocols are innovative. The Commission's current view is that there is no significant innovation in these protocols," said competition commissioner Neelie Kroes.

The Commission claims that a review of patented and unpatented technologies that comprise the interoperability software found only four minor components that "represent a limited degree of information".

Microsoft senior vice president and general counsel Brad Smith blasted the Commission's decision in a written response.

"The proposed findings suggest that unless our intellectual property is innovative and patentable, it has to be made available royalty free," he said.

"That has never been the standard for software or other intellectual property and it misstates the test agreed to by the Commission and Microsoft in 2005.

"We believe we have been fair in setting proposed protocol prices, and an analysis by PricewaterhouseCoopers found that our proposed prices were at least 30 per cent below the market rate for comparable technology." 

The Commission has given Microsoft four weeks to respond.
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