Microsoft throws in the towel in EU antitrust battle

— 1:38 PM on October 22, 2007

Today marks a dark day for Microsoft but a victory for open source developers and Microsoft competitors. Following the failure of its appeal with the European Court of First Instance, the software behemoth has admitted defeat and agreed to comply with the European Commission's requirements. Microsoft also says it won't appeal another court judgment handed down last month.

According to a report by the Wall Street Journal, Microsoft CEO Steve Ballmer reached a compromise with EU Competition Commissioner Neelie Kroes over dinner in a small restaurant in the Netherlands. The report elaborates:

Under the agreement, Microsoft will license all of its intellectual property, except patents, necessary for competitors to work with a version of Windows used on business servers. Competitors will now pay only a one-time fee for the license of 10,000 euros, rather than royalties. If they believe they need to license patents from Microsoft, Microsoft is required to do so at the rate of 0.4% of the competitors' revenue from the product, well below the 5.95% rate originally suggested by Microsoft.

Mrs. Kroes, for her part, stopped the clock on daily fines of up to €3 million per day against Microsoft and declared the U.S. software giant was – at least for now -- in Europe's good graces. "As of today, the major issues concerning compliance have been resolved," she said.

As the WSJ report points out, the one-time fee will make it easier for open-source software providers and developers to license interoperability information from Microsoft.

As far as Microsoft itself is concerned, today's decision means the fixed fine of €497 million ($704 million) imposed by the European Commission in 2004 will be transfered from an escrow account to the EU. However, the WSJ says the fate of the €281 million ($398 million) Microsoft incurred in 2006 isn't clear. Microsoft appealed the ruling behind the second fine, but the WSJ says a Microsoft spokesman "didn't immediately know whether Microsoft would withdraw that appeal."

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