Microsoft to respond to EC over licensing

Microsoft is due to respond this week to the European Commission’s demand that it come up with more acceptable licensing terms for its workgroup server protocols or face a possible noncompliance fine of $5 million a day.

The Commission’s licensing request stems from the antitrust ruling it made against the software maker last year, when it decided the company had abused its dominance in the desktop software market to gain advantage in related markets. As part of antitrust sanctions, it ordered Microsoft to reveal workgroup server protocols that would allow competitors to develop programs that work well with Windows under fair and non-discriminatory licensing terms.

Last month, the Commission rejected Microsoft’s proposed terms after complaints from opponents such as the Free Software Foundation Europe, which argued that the terms are unfair to open-source developers. The Commission gave the company two weeks to come up with more acceptable terms, and reserved the right to hit it with financial penalties of up to 5 percent of its worldwide daily sales, which amounts to about $5 million a day.

The Redmond, Washington, company has already come to loggerheads with the Commission over its compliance with antitrust sanctions. In addition to opening server protocols, the regulator also ordered the company to distribute a version of its Windows operating system in Europe without its Windows Media Player (WMP) included because it felt that the bundling of the products shut out competitors.

Microsoft wanted to call the WMP-free version “Windows XP Reduced Media Edition” but the Commission rejected the name as unappealing. The company agreed last week to call software without its media player “Windows XP Home Edition N” and “Windows XP Professional Edition N” at the regulator’s behest.

The compliance negotiations continue despite the fact that Microsoft has filed for an appeal of the antitrust case, which is expected to be referred to the European Court of Justice in 2006. In December the software maker was denied a request to suspend the sanctions pending outcome of the appeal.