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12/22/2005
04:50 PM
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Microsoft Will Fight EU Fines

Microsoft responded to the European Commission's threat of huge daily fines with some fighting words from corporate counsel Brad Smith, who says, "Every time we make a change, we find that the commission moves the goal post and demands another change."

Microsoft on Thursday accused the European Union Commission of constantly changing its antitrust demands, and said it would fight the huge daily fines the Commission threatens to levy.

Earlier Thursday, the Commission, which is responsible for seeing that Microsoft complies with a 2004 antitrust ruling, said it would begin fining the U.S.-based developer up to 2 million euros ($2.37 million) a day if the company doesn't meet its demands.

Among those, said the Commission, was to provide better documentation on the inner workings of Windows, a necessary move to give competitors a level playing field in building Windows applications, the EU said.

The Commission said it would back-date the fines to Dec. 15. If it follows through, Microsoft already is in the hole to the EU to the tune of 16 million euros ($19 million).

Brad Smith, Microsoft's general counsel, blasted the Commission in a prepared statement released later Thursday.

"We have now responded to more than 100 requests from the Commission," said Smith. "We continue working quickly to meet the Commission's new and changing demands. Yet every time we make a change, we find that the Commission moves the goal post and demands another change."

Microsoft, said Smith, will work to fully comply with the EU Commission's requirements, but said it would fight the latest demands. "We will contest today's statement to the full extent permitted under EU law, including a full Oral Hearing on these issues."

An oral hearing would take time to arrange, which would give Microsoft both breathing room and another chance to make its case.

Smith left little doubt about the tack that Microsoft would take, and essentially accused the Commission of technical ignorance.

"The Commission confuses disclosure of the source code with disclosure of the internals and insists that it will fine the company if it fails to address this. During the September 3, 2004 hearing with President Vesterdorf, the Commission clearly stated [that documenting the internal workings of Windows] was not within the scope of its decision."

In 2004, the European Union fined Microsoft a record 497 million euros ($613 million), and demanded that it both share source code with rivals and offer a version of Windows sans Microsoft's Media Player. In June 2005, Microsoft released its Windows XP N edition in Europe, which omitted the Media Player. No computer maker offers a PC with XP N pre-installed, however.

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