Microsoft Pledges Fail to Move the EU

The software giant's new claims of interoperability haven't impressed the European lawmakers who ultimately will also weigh in on a possible Yahoo takeover

by Aaron Ricadela

European regulators issued a swift verdict on Microsoft's latest attempt to show it plays well with others: We've heard it all before.

Microsoft (MSFT) on Feb. 21 announced on a series of steps to help competitors' products interact with its own, part of a larger effort to assuage concerns that the world's largest software maker is engaged in anticompetitive behavior. The moves come amid a European Union investigation into the company's business practices and may also be aimed at getting in good stead with the European lawmakers who will scrutinize Microsoft's proposed takeover of Internet company Yahoo! (YHOO).

At least initially, the EU was decidedly unimpressed. "The Commission would welcome any move towards genuine interoperability," the commission said in a statement. "Nonetheless, the Commission notes that today's announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability." None of those has done much to mollify the EU. Lawyers representing the companies that allege Microsoft undermines competition were more pointed: "The world needs a permanent change in Microsoft's behavior, not just another pronouncement," said Thomas Vinje, the top lawyer at the European Committee for Interoperable Systems, a trade group that includes IBM (IBM), Oracle (ORCL), Sun Microsystems (JAVA), Adobe Systems (ADBE), and Red Hat (RHT).

Promises, Promises

The remarks came in response to a flurry of Microsoft pledges. Microsoft began disclosing software code that could let other companies' programs more easily share data with its most important products, including the Windows operating system and the Office suite of productivity software.

The company also extended an olive branch to the community of developers who work with "open" standards available over the Internet. Microsoft promised not to sue noncommercial developers of open-source software that connects to its products, and to license patents more freely to open-source developers who create commercial products. In addition, Microsoft plans to let its popular Word, Excel, and PowerPoint software store data in formats the open-source products can read. The moves are designed to blunt advantages Microsoft's own developers have in designing products that work better with one another than competitors' software can.

In the open-source software community, Microsoft's announcement was greeted with measured optimism. "It's an acknowledgement by Microsoft that the world is moving toward an IT industry that believes in the value of openness," says Jim Zemlin, executive director of the Linux Foundation, a trade group that includes many large technology vendors, such as IBM, Hewlett-Packard (HPQ), and Sun, and which pays the salary of Linus Torvalds, creator of the open-source Linux operating system.

Microsoft Chief Executive Steve Ballmer said during a Feb. 21 conference call with reporters and analysts that the new steps are aimed at complying with antitrust orders from the EU and the U.S. Justice Dept., but also reflect a computer industry in which programs and Web sites readily exchange data. "From an economic perspective, in some senses you could say we're opening up, yet at the same time we retain valuable intellectual property," said Ballmer.