Microsoft Fights Eu Windows Curbs

Microsoft was close to a deal with the European Commission earlier this year which would have revealed more of its secrets than it has now been ordered to hand over, a court was told yesterday.

The US software group is attempting to get the European court of first instance to suspend the commission's ruling that it is violating anti-trust law, which would force the company to reveal its software code to rivals.

In March, the commission found that Microsoft used the power of its Windows operating system, which it said held virtual monopoly in personal computers, to cripple competitors and ordered the company to change the way it does business.

Court president Bo Vesterdorf must decide whether to delay the enforcement of the order pending Microsoft's appeal, a process which could take several years, or allow it to be implemented at once.

Microsoft, which was fined a record €497m in March, has consistently argued that the EU decision would cause it "irreparable harm" by allowing rivals such as Linux and Novell to effectively copy its unique server technology.

They in turn argue that the group is abusing its virtual monopoly in desktop operating systems by making it impossible for competitors supplying rival servers to inter-operate with Microsoft systems.

Brad Smith, the US software group's counsel, told the court yesterday the two sides had virtually reached a settlement in early March. "We were prepared to go further and make concessions that are outside the scope of the [Brussels] decision," he said.

Senior commission officials confirmed that the US group had been ready to go further and seized on his admission as undermining Microsoft's case that it would suffer "irreparable damage".

The final stumbling block is believed to be the commission's demand that an independent trustee monitor the disclosure of the secret protocols in servers.

Microsoft's advocate, Ian Forrester QC, described this as "the commission's private sheriff".

Mr Smith said: "We were prepared to enter into an agreement even though at the top of the company we did feel it would result in harm in some areas. We would have avoided a fine and three or four years of litigation."

Earlier, Microsoft's smaller rivals urged the court to uphold an immediate implementation of the EU decision or risk finding that the US group had extended its monopoly through the planned launch in 2006 of its latest Windows version. A final court hearing on Microsoft's appeal is likely after that date.

Jeremy Allison, co-founder of Samba, which is closely linked to Linux, derided Microsoft's claims that its server protocols were a multi-million investment. "They're valuable because they're kept secret and that prevents competition."

Accusing Microsoft of simply adding "tweaks" to known technology, he said his company had been given access to the protocols in the 1990s - before the US company had established its monopoly - but this had been withheld with Windows 2000.

"We will fall only further behind if these remedies imposed by Brussels are delayed."