Out-Law News 2 min. read
03 Aug 2000, 12:00 am
The Commission's action follows a complaint by rival software company Sun Microsystems that Microsoft breached European Union antitrust rules by engaging in discriminatory licensing and by refusing to supply essential information on its Windows operating systems.
The Commission observed that Microsoft has a market share of about 95% in the market for PC operating systems and thus enjoys a practically undisputed market dominance. Most PCs today are embedded into networks, which are controlled by servers. Interoperability, i.e. the ability of the PC to talk to the server is the basis for network computing. Interoperability can only function if the operating systems running on the PC and on the server can talk to each other through links or so-called interfaces.
To enable competitors of Microsoft to develop server operating systems which can talk to the dominant Windows software for PCs, interface information - technical information and even limited parts of the software source code of the Windows PC OS - must be known.
Without interoperating software and as a result of the overwhelming Microsoft dominance in the computer software market, computers running on Windows operating systems would be, in effect, obliged to use Windows server software if they wanted to achieve full interoperability. This phenomenon is referred to as "the client (PC) dragging the server".
Sun Microsystems alleged, in a complaint in December 1998 and in subsequent submissions, that the near monopolistic position of Microsoft in the PC operating system market creates an obligation on Microsoft to disclose its interfaces to enable interoperability with non-Microsoft server software.
This obligation would cover the OSs distributed by Microsoft at the time when Sun's request for disclosure of interface information was refused in October 1998, i.e. Windows 95, 98, NT 4.0 and all subsequent updates.
Sun alleges that the launch of Windows 2000 on 17 February 2000, was a final step in Microsoft's strategy to strengthen the effects of its refusal to supply interface information with the intention of driving all serious competitors out of the server software market. Sun claims that Microsoft has applied a policy of discriminatory licensing by distinguishing between its competitors according to a so-called "friend-enemy" scheme.
The Commission was given evidence that Microsoft did not carry out its obligation to disclose sufficient interface information about its PC operating system.
The Commission believes that Microsoft gave information only on a partial and discriminatory basis to some of its competitors. It refused to supply interface information to competitors like Sun Microsystems.
The Commission has said that resolution of this case is of the utmost importance as operating systems for servers constitute a strategic sector in the development of a global market for information technology and e-commerce.
Commissioner in charge of competition, Mario Monti, said in a statement issued today:
"The Commission welcomes all genuine innovation and advances in computer technology wherever they come from - as highly positive developments for consumers and industry alike. Effective protection of copyrights and patents is most important for technological progress. However, we will not tolerate the extension of existing dominance into adjacent markets through the leveraging of market power by anti-competitive means and under the pretext of copyright protection. All companies that want to do business in the European Union must play by its antitrust rules and I'm determined to act for their rigorous enforcement."