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Microsoft offers up source code in EC dispute

To avoid EU regulatory fines of up to $2.45 million per day, Microsoft offers to license some of its Windows source code to rivals.

Microsoft on Wednesday offered to license some of its Windows Server source code to rivals, as it seeks to avoid a potential fine of up to $2.45 million a day imposed by European antitrust regulators.

But whether the European Commission is willing to accept some of Microsoft's server source code, in lieu of requested server protocols, has yet to be seen. The Commission said although Microsoft has issued a public announcement it will review, the antitrust agency has yet to receive a formal reply to its statement of objections it issued in late December. Microsoft has until Feb. 15 to reply to the statement of objections.

The commission last month warned Microsoft it could face a retroactive fine of up to 2 million euros, or $2.45 million, per day for failing to comply with its earlier March order. That order required the software giant to provide its server protocols to rivals, in order to aid interoperability between the dominant operating system and rivals' products. The order also required Microsoft to offer a version of its operating system without its media player bundled inside it.

Microsoft is appealing the March order and the case is expected to be heard by the European Court of First Instance from April 24 to 28. A decision in the case, however, is expected to take a year or more.

In announcing its source code proposal, Microsoft stated it would license the server code for the technologies covered by the European Commission's decision on March 2004. By way of complying with the commission's statement of objections, the software giant said it is offering the source code as a means to "categorically" address all issues and complaints the Commission has previously raised.

"The Windows source code is the ultimate documentation of Windows Server technologies. With this step our goal is to resolve all questions about the sufficiency of our technical documentation," Brad Smith, Microsoft general counsel, said in a statement.

In addition to its Windows server source-code proposal, Microsoft also noted it has made a similar offer for its Windows desktop operating system to the Department of Justice. If accepted, the Windows desktop source code would replace the protocols that developers currently have access to under a 2002 agreement with the antitrust agency.

Although Microsoft is offering its desktop source-code for its U.S. anti-trust case, a Department of Justice representative noted the agency has been in discussions with Microsoft to provide its Windows "server" source-code.

But Microsoft has recently encountered difficulty in responding to requests by a Department of Justice panel of technical experts, who are viewing and testing the protocol documentation for the antitrust agency.

Once the European Commission has received Microsoft's reply to its statement of objections, the commission will consult its advisory committees of member-state competition authorities. The EC will then issue a decision on whether to impose its fine of up to $2.45 million a day on Microsoft. The fine would be retroactively applied to Dec. 15 of last year.

Reuters contributed to this report.