Inside Windows

For 20 years, the source code to Microsoft's Windows operating system has been a closely held secret. Prying eyes could lead to rogue Windows distributions, application incompatibilities, unauthorized use in other products--and better-informed competitors. Things changed last week as Microsoft, under pressure from the European Commission, disclosed plans to let competitors get their hands on a chunk of Windows and view it line by line. It's a surprising reversal to Bill Gates' long-standing guard-the-code strategy. It's also an offer that many in the industry--and perhaps the EC regulators it's meant to please--will find easy to refuse.

	Microsoft lawyer Brad Smith (left) lunches with former European Parliament President Pat Cox (right) and Friends of Europe Secretary General Giles Merritt, before dropping a surprise on EC regulators. Photo by Yves Herman/Reuters

Microsoft general counsel Brad Smith described the decision as a "bold stroke" to satisfy the European Commission's demand that Microsoft make it easier for rivals to build products that incorporate the Windows server communications protocols, since it would show them how Microsoft itself did it. That's been one of the sticking points in the commission's long-running antitrust case against Microsoft. The company has issued 12,000 pages of specs so far in trying to satisfy the EC--drawing yawns from other tech companies and a formal statement of objection from the EC last month that put the onus on Microsoft to do more.

So Microsoft coughed up its code. "If you want to understand these communications protocols, the source code is the ultimate documentation," Smith said at a press conference in Brussels. "It is the DNA of the Windows server operating system."

Strings Attached
But Microsoft's move isn't as bold as the company makes it out to be. Microsoft isn't opening up the entire Windows operating system, only the part that contains certain communications protocols. Companies that want to participate must pay for the privilege. And there are strings attached--a license that lets them view the code but not copy it. "We're not open-sourcing Windows," Smith noted.

Microsoft's restrictive "reference license" is designed for technology companies, not individual developers, so don't expect dozens of innovative products to spring from legions of Windows aficionados.

Even many of Microsoft's largest buyers of business software have passed on earlier offers to view the Windows code. Under the company's 4-year-old Shared Source Initiative--through which Microsoft makes available more than 80 source-code offerings under a variety of licenses--IT departments in thousands of companies are qualified to access Windows source code. Only about 100 have done so, most of them large companies such as Procter & Gamble. That's because combing through Windows source code takes time and expertise. Those that do, use the code to troubleshoot custom applications or tackle security problems. But most IT departments are too busy with other projects to fuss with it; they leave close scrutiny of Windows code to Microsoft.

What's different about Microsoft's European offer is that it's aimed at competitors, not customers or partners. It comes after the EC's statement of objection last month, citing "Microsoft's failure to disclose complete and accurate" documentation to let non-Microsoft servers interoperate with Windows PCs and servers. The EC is determined to force Microsoft to loosen its grip on the market and threatened to fine the company $2.45 million per day if it doesn't do a better job documenting its protocols. Microsoft has until Feb. 15 to answer those charges.

Appeal In April
Microsoft's appeal of a 2004 EC antitrust decision that it abused its dominant market position will be heard in April. It's the next step in the company's long battle with the European authorities over allegations of unfair business practices, which led to, among other things, a record fine of $610 million. The EC last week said that it would review Microsoft's source-code offer.

All of which underscores that Microsoft is motivated mainly by regulatory appeasement, not altruism or capitalism, in making its source-code pitch. But the offer may not even serve its goal of getting the European regulators off its back, judging by the chilly initial response. "Normally speaking, the source code is not the ultimate documentation of anything, which is precisely the reason programmers are required to provide comprehensive documentation to go along with their source code," said Neelie Kroes, the European Union's competition commissioner, in an interview with Reuters.

Gates' company already is licensing protocol documentation under a 2002 U.S. antitrust settlement, but federal and state officials have repeatedly expressed dissatisfaction with Microsoft's compliance. The Justice Department last week blasted the company for its slow pace in providing documentation.

The source code it's offering will come from Windows Server 2003. (Separately, Microsoft last week said Windows Vista is on track for testing by businesses this quarter and general release in the fourth quarter. A Longhorn version of Windows server is due next year.)

Any Takers?
Competitors might not even want the deal. Microsoft's existing offer in Europe of reams of documentation and free tech support, but no source code, has been a dud: Not a single company has signed up. Microsoft has had more interest in the United States, where 26 companies are in its Communications Protocol Program. It has proposed extending the source-code offer to that program, too, and awaits U.S. regulators' approval. A few Microsoft partners have access to Windows code negotiated through custom arrangements.

Last week, however, it was hard to find potential takers. Novell is following developments "with interest," a spokesman said, but he declined to address the offer directly, citing Novell's settlement last year with Microsoft in the European antitrust case.

One unanswered question, is just how much of the Windows source code will be made available? Those details haven't been worked out, but Microsoft officials pledge to err on the side of providing more code than is needed to satisfy the EC mandate.

Even a fraction of the Windows source code would be a lot for most companies. By some estimates, Windows comprises 50 million lines of code.

Microsoft's stock market value last week was about $280 billion--$5,600 per line of Windows code. Given the stakes, Microsoft, its competitors, and regulators will be haggling over that precious programming output for a long time to come.

-- With Gregg Keizer