Report Questions Microsoft Fees
Federal and state authorities reported Thursday that Microsoft Corp. was abiding by many of the conditions it had agreed to last year in its landmark settlement with antitrust enforcers, though they remained concerned about how much the software giant was charging to let competitors use its technology.
In their first report on compliance to the federal judge overseeing the agreement, lawyers for the Justice Department and 16 states including California and New York provided new details on how Microsoft had responded to their concerns and those of other companies.
Most of the 18 substantive complaints by private parties concern Microsoft’s commitment to license, on reasonable terms, the techniques by which its software on personal computers communicates with its software on central computers, known as servers.
The issue is important because Microsoft’s rivals contend that the Redmond, Wash.-based firm has improperly leveraged its monopoly on PC operating systems to gain an advantage in the more competitive market for server software.
Microsoft has responded to those complaints -- and the prosecutors’ concerns -- by making a greater number of changes than previously disclosed in the way it licenses the communications protocols. In general, the changes give more power to the companies that pay tens of thousands of dollars for the licenses. For instance, Microsoft now guarantees them better documentation and gives them greater rights to sue.
But the Justice Department and the states said they were still negotiating with Microsoft over what its rivals said were overly expensive fees for the licenses themselves. “Plaintiffs remain concerned about the royalty structure and rates proposed by Microsoft,” the lawyers told U.S. District Judge Colleen Kollar-Kotelly in their 32-page report.
Only four companies have signed license agreements for the protocols, according to the report: EMC Corp., Network Appliance Inc., VeriSign Inc. and Starbak Communications Inc.
“The licensing terms don’t make business sense, and they would make our products cost-prohibitive,” said Lisa Poulson, a spokeswoman for server maker Sun Microsystems Inc.
Microsoft said reaching an agreement on the amount it charges may be taking awhile because it needs more customer feedback to determine a reasonable market rate.
“We’re still open to feedback and will consider making additional changes,” Microsoft spokesman Jim Desler said.
The government attorneys said they were prepared to tell the judge more in person and could seek a new enforcement order if continuing talks weren’t successful.
“We consider that particular aspect of the consent decree one of the most important provisions,” said Tom Dresslar, a spokesman for California Atty. Gen. Bill Lockyer. A spokeswoman for the Justice Department declined to comment.
Microsoft shares closed at $26.45, down 43 cents, in regular Nasdaq trading Thursday, then rose slightly in after-hours trading after the report’s release.
