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EU Commission Announces Market Test of Microsoft Suggestions on Browser Choice, Interoperability - Updated
Wednesday, October 07 2009 @ 11:15 AM EDT

The EU Commission and Microsoft have done a draft of a deal. Lunch, anyone? They will do market testing of the browser screen for a while, beginning on Friday. Here's what it will look like, according to Mary Jo Foley's report. And they have worked out a kind of draft solution on interoperability standards, which Microsoft has published on its website. Both solutions are working off of two suggestions Microsoft proposed itself.

Here's Microsoft's statement, glowing with happiness that their two proposals, with some changes suggested in the last month or so by the EU Commission, have basically been adopted, if the test works out. And here's Neelie Kroes' blog with her announcement:

Now the Commission has agreed to formally market test proposals made by Microsoft that, if adopted, would offer current and future users of Windows software in Europe a meaningful choice between Internet Explorer and its competitors.

Currently Windows users (most computer users) do not get an upfront choice because Microsoft ties Internet Explorer to the Windows PC operating system. Under the new proposal users would be offered 12 browser options on a ‘choice screen’ appearing on their computers. This is the sort of effective and unbiased choice we have been looking for, so today is another positive step towards this outcome.

Are they pre-installed? Or only IE and you get to install any alternative if you so choose? What do you think? You have to download them. We all know how much people love to do that. Not. OEMs can preinstall any browser as the default, but come on. What do you think they'll choose? What is the improvement? Letting people know there are choices, I guess. That's better than nothing. But I can download any browser I want already. This is an improvement in that IE can't reassert control as the default, unless you want it to.

Nice when you get to choose your own solutions. Here are the EU documents, the press release and the documents relevant to the case. Note what the press release says about interoperability:

In July 2009, Microsoft also made proposals in relation to disclosures of interoperability information that would improve interoperability between third party products and several Microsoft products, including Windows, Windows Server, Office, Exchange, and SharePoint (see MEMO/09/352 ). Microsoft is publishing improved proposals on its website. The Commission welcomes this initiative. Even though it remains informal vis-à-vis the Commission, Microsoft’s proposal, which is in the form of a public undertaking, includes warranties that Microsoft offers to third parties and that can be privately enforced.
Privately enforced? Informal? Meaning we get to pay to sue Microsoft? The EU Commission washes its hands regarding enforcement? I'm afraid that doesn't sound promising. The Register's John Oates noticed that very point. In essence, Microsoft will regulate itself on interoperability. I'm sure *that* will work out well. Here's the Warranty Agreement Microsoft agrees with itself to follow with regard to interoperability. It's in .doc format.

ECIS has put out a statement, pointing out some issues that seem not to be addressed and indicating it will be involved in the testing process, monitoring:

ECIS and its member companies will analyse the commitments to verify their ability to ensure that Microsoft respects both the letter and the spirit of the settlement. The original Microsoft proposals published in July were inadequate in many respects. It is particularly important that any settlement includes vigorous enforcement mechanisms including regular monitoring to ensure that Microsoft lives up to its part of the deal and that users’ choice of browsers is truly unbiased as Commissioner Kroes has promised.
Hmm. I hope the EU Commission doesn't let Microsoft run a "Get the Facts" type of "market testing". But remember, the "market" means you. Technically this isn't a final decision, but absent negative feedback, it is. Even with it, it probably is. Let me show you.

Here's the first paragraph from the Market Test Notice [PDF]:
According to Article 9 of the Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty 1, the Commission may decide – in cases where it intends to adopt a decision requiring that an infringement is brought to an end and the parties concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment – to make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission. According to Article 27(4) of the same Regulation, the Commission shall publish a concise summary of the case and the main content of the commitments.
So, interested parties like ECIS can provide feedback, and they in turn need to get feedback, I assume. From the EU Commission press release:
Interested parties will be formally invited by the market test notice in the Official Journal to present their comments within one month of the publication in Official Journal.
So don't email them. Well, you can, but they aren't asking for that. They want to formally hear from interested parties. But remember, the "market" is you. Microsoft may have all the money in the kingdom, so to speak, and the power that goes with it, but you have the numbers. For that matter, if you are not happy with the solutions, you do have a choice to just stop using their products. That sends a message also, not to mention altering the money/power equation. Use what you like, of course, but if you really are tired of Microsoft, thanks to some good-hearted and honest volunteers, you do have a choice.

Here's a couple of paragraphs from the press release regarding the browser choice:

The improvements that Microsoft has made to its proposal since July would ensure that consumers could make a free and fully informed choice of web browser. Microsoft has in particular agreed to present users with a first screen explaining what web browsers are. "Tell me more" buttons for each browser would also enable users to learn more about the web browser they may wish to install. The user experience would be better and the choice screen would better represent competing browser vendors. Finally, the proposed commitment would now be subject to a clause allowing the Commission to review it in the future to ensure that consumers would continue to have a genuine choice among browsers.

Under its revised proposal, Microsoft would make available for five years in the European Economic Area (through the Windows Update mechanism) a choice screen enabling users of Windows XP, Windows Vista and Windows 7 (Microsoft's next version of its PC operating system) to choose which web browser(s) they want to install in addition to, or instead of Internet Explorer. Likewise, in future versions of Windows, including Windows 7, PC manufacturers would be able to install competing web browsers, set those as default and disable Internet Explorer.

Here's the full ECIS statement:
ECIS Press Statement

In reaction to today’s European Commission announcement that it has concluded a draft settlement to end Microsoft’s anti-competitive practices in the market for browsers, server operating systems and related products, ECIS Legal Counsel & Spokesman, Thomas Vinje, a partner at Clifford Chance has made the following statement.

Brussels – 7 October 2009 – “ECIS applauds the tenacity of European Competition Commissioner Neelie Kroes in securing Microsoft’s admission that it must end its anticompetitive bundling and non-disclosure practices which have harmed consumers and hindered innovation for over a decade.

“ECIS and its member companies will analyse the commitments to verify their ability to ensure that Microsoft respects both the letter and the spirit of the settlement. The original Microsoft proposals published in July were inadequate in many respects. It is particularly important that any settlement includes vigorous enforcement mechanisms including regular monitoring to ensure that Microsoft lives up to its part of the deal and that users’ choice of browsers is truly unbiased as Commissioner Kroes has promised.

“ECIS sincerely hopes that the month-long market testing of these commitments will prove the settlement sufficiently robust to effectively open the Windows monopoly system to genuine competition today and equally forward looking to deal with a rapidly evolving marketplace. “Microsoft’s interoperability commitment takes the shape of a public undertaking relying on private enforcement, according to the Commission’s press statement. Our experience over the last decade has shown that scrutiny by public authorities is critical to ensure Microsoft’s effective compliance and must accompany private enforcement mechanisms.

“ECIS notes that the settlement does not appear to deal with the inadequacies of Microsoft’s standards compliance, unfair pricing practices or other concerns related to patent abuse or standards manipulation.” For more information see the ECIS website: http://www.ecis.eu/index.html.

And here's the meat of the Microsoft press release:
Statement: Microsoft Welcomes European Commission Market Testing Announcement

A statement by Brad Smith, General Counsel, Microsoft Corporation, regarding the European Commission’s decision to market test a set of measures Microsoft has offered to address competition law issues relating to Windows, Office and other high volume products.

REDMOND, Wash., Oct. 7, 2009 –The following is a statement by Brad Smith, General Counsel, Microsoft Corporation, regarding the European Commission’s announcement about its decision to market test a set of measures Microsoft has offered to address competition law issues relating to Windows, Office and other high volume products:

We welcome today’s announcement by the European Commission to move forward with formal market testing of Microsoft’s proposal relating to web browser choice in Europe. We also welcome the opportunity to take the next step in the process regarding our proposal to promote interoperability with a broad range of our products.

Today’s announcement follows our publication of earlier drafts of these two proposals in July and broad feedback from across our industry to the Commission in August. Microsoft then engaged in extensive discussions with the Commission over the last month, during which we agreed to make numerous changes to improve these proposals. For Microsoft, today’s decision is a significant step toward closing a decade-long chapter of competition law concerns in Europe.

Summary of Proposed Understandings

Today’s announcement addresses two sets of measures. The first covers the inclusion of Internet Explorer in Windows and the way this will work in the future in Europe. This proposed measure ensures that PC manufacturers will continue to be able to install any browser on top of Windows and make any browser the default. It also ensures that PC manufacturers and users will be able to turn Internet Explorer on and off. And it ensures, that for the next five years in Europe, PC users who are running Internet Explorer as their default browser will receive a ballot screen that will enable them to easily download and install another browser if they would like. This ballot screen will be displayed automatically. PC users can make any other browser the default if they prefer. They can even turn Internet Explorer off, although there’s no need to turn off Internet Explorer in order to use a different browser or make another browser the default.

The Commission stated today in its formal notice that, subject to market testing, it intends to adopt a decision that makes the understanding described above legally binding on Microsoft in Europe for the next five years.

The second measure is a “public undertaking” that covers interoperability with Microsoft’s products—the way our high share products work with products from our competitors. This applies to an important set of Microsoft’s products—our Windows, Windows Server, Office, Exchange and SharePoint products—and represents the single biggest legal commitment in the history of the software industry to promote interoperability. Microsoft’s proposed undertaking will ensure that developers throughout the industry, including in the open source community, will have access to technical documentation to assist them in building products that work well with Microsoft products. Microsoft will also be required to support certain industry standards in its products and to fully document how these standards are supported. Microsoft’s proposed undertaking will make available legally-binding warranties that would be offered to third parties.

The interoperability undertaking will give full effect to the policy outlined by Commissioner Kroes in a major policy speech given in June 2008. At that time, the Commissioner said that companies offering high-share software products should be required to (i) disclose technical specifications to enable interoperability; (ii) ensure that competitors can access complete and accurate information and have a remedy if not; and (iii) ensure that the technical specifications are available at fair royalty rates, based on the inherent value of the technology disclosed. The interoperability undertaking, developed through extensive consultations with the Commission, would implement this approach in full.

The Commission stated in its announcement today that it welcomes the company’s interoperability initiative. For reasons relating to European legal procedure, this interoperability undertaking follows a different procedural path from the web browser proposal. However, Microsoft will adopt the proposed undertaking in final form upon the Commission’s final adoption of the Internet Explorer commitments.

Proposals Improved After Broad Feedback and Commission Consultations

Since July, the Commission has received extensive feedback on Microsoft’s initial proposals from a wide range of groups including browser competitors, PC manufacturers, and trade and consumer associations. Based on this feedback, Microsoft agreed with the Commission to make approximately 20 substantive changes to our proposals, including changes to:

  • Ensure that competing browsers can be downloaded from the ballot screen more quickly and easily.

  • Ensure equivalent placement on the Windows 7 taskbar for Internet Explorer and all other browser icons.

  • Improve the usability of the browser ballot by adding introductory information, improving the design of the ballot page, and adding a feature to enable users to return more easily to it at a later time if they wish.

  • Adjust the placement of the browser choices on the ballot screen so that Internet Explorer is no longer listed first. Instead, the five most popular browsers will be listed in alphabetical order by vendor, followed by the next seven most popular (also alphabetical), so that 12 choices are displayed in total.

  • Adopt suggestions from competitors to strengthen Microsoft’s obligations to publish documentation about the company’s interoperability technology.

  • Address security software vendor feedback by ensuring disclosure of certain programming interfaces accessed by Microsoft’s own security products.
As we’ve said before, the steps described above will require significant change within Microsoft. We believe that these are important steps we should take in order to resolve the Commission's competition law concerns.

Today is an important day. Although the European Commission has not made its final decision, today’s news is a major step forward, and we’re hopeful this will help move us towards closure to the past and the building of a new foundation for the future.

Here's the Proposed Commitments document [PDF], the part about OEMs:
(4) Microsoft shall not retaliate against any OEM for developing, using, distributing, promoting or supporting software that competes with Microsoft web browsers, in particular by altering Microsoft's commercial relations with that OEM, or by withholding Consideration. Without prejudice to the application of EC competition law nothing in this Commitment shall prohibit Microsoft from providing Consideration to any OEM with respect to any Microsoft web browser where that Consideration is commensurate with the absolute level or amount of that OEM’s development, distribution, promotion, or licensing of that web browser.

(5) Microsoft shall not enter into any agreement with an OEM that conditions the grant of any Consideration on the OEM’s refraining from developing, using, distributing, promoting or supporting any software that competes with Microsoft web browsers. Without prejudice to the application of EC competition law nothing in this Commitment shall prohibit Microsoft from entering into an agreement with an OEM for any joint venture that limits the development, use, distribution, promotion or support of the jointly developed web browser technology to use with or in a Windows Client PC Operating System or a Microsoft web browser

(6) Microsoft shall not terminate a direct OEM license for Windows Client PC Operating Systems without having first given the OEM written notice of the reasons for the proposed termination and not less than thirty days’ opportunity to cure. Notwithstanding the foregoing, Microsoft shall have no obligation to provide such a termination notice and opportunity to cure to any OEM that has received two or more such notices during the term of its license

Hahahahaha. I'm positive Microsoft will play fair. They always do. We saw that in the OOXML saga, did we not, class? Kidding. But seriously, I'm sure they will be super good during the market test period, let's put it that way. And be real. They don't actually have to do any of the above. OEMs will put the most popular browser on the computers they sell. That's why monopolies like to stay that way. There are built-in advantages if you are the 800-pound gorilla in the room.

Here are the interoperability documents, in .doc format, natch, speaking of interoperability, posted on Microsoft's website:

So, to read about Microsoft's proposed interoperability self-made solution, you need to have the ability to read Microsoft's proprietary document format. If the EU Commission was really serious, they'd notice that.

And what do you think the future holds if the EU Commission does nothing about the OOXML standards scandal? I think in the future, you won't be able to open Microsoft documents adequately, even with OpenOffice.org, once all the proprietary extensions are woven in to Microsoft's version of XML. Microsoft's software will just run that much smoother than you can, sort of like WordPerfect. And you know how that turned out. Here's my evidence, from the Warranty Agreement:

For the avoidance of doubt, TAM support provided with respect to the Covered Standards is intended to facilitate Company’s understanding of Microsoft’s particular implementation of such Covered Standards in the applicable Covered Products to the extent reflected in the Standards Documentation provided by Microsoft. The parties acknowledge and agree that the applicable standards development organization maintains and is responsible for the accuracy and sufficiency of the documentation of Covered Standards as adopted by the applicable standards development organization.
Microsoft never changes, as I read the tea leaves. Never. And this agreement is Exhibit A. You want to know the real problem? Here it is, a statement by Kroes today:
“This is a trustful deal that we’re making. I trust Microsoft,” Kroes, 68, told journalists today in Brussels, adding that she’s been in contact with Microsoft Chief Executive Officer Steve Ballmer. “There can’t be a misunderstanding. Here is the final result of a long discussion over a long period.”
Famous last words. A trustful deal with Microsoft. Lordy. The problem isn't that they don't understand. Call me cynical, but I also don't believe she suddenly trusts Microsoft. On what basis? Microsoft's behavior for the last ten years in its dealing with the EU Commission? Puh lease.

Ms. Kroes' five-year term ends in a month, unless it is renewed or extended.

Update:

I thought it would be useful to bring you up to date on how Microsoft is doing in complying with the 2002 order in the US DOJ antitrust action. This is with oversight, by the way, not Microsoft approving itself. Here's the modified final order from 2006, after the appeal. How is Microsoft doing? Complying heartily? Let's read a section from the August 2009 Joint Status Report, the most recent, on how Microsoft is doing on providing documentation for interoperability purposes, as ordered:

Plaintiffs' work concerning Section III.E and the Microsoft Communications Protocol Program ("MCPP") continues to center on efforts to improve the technical documentation provided to licensees. In particular, Plaintiffs, in conjunction with the Technical Committee ("TC") and Craig Hunt, the California Group's technical expert, are reviewing the results of Microsoft's project to rewrite the technical documentation that has been described in detail in previous status reports and identifying issues with the revised documentation for Microsoft to address.(1)

As discussed in prior Joint Status Reports, as part of the technical documentation rewrite project Microsoft is creating a set of "System Documents" to describe the interaction among the protocols in a number of complex scenarios. Microsoft delivered the final System Document on June 30, completing the technical documentation rewrite project. Plaintiffs and the TC are reviewing the complete set of documentation to determine whether it is "substantially complete."(2) If the quality of the unreviewed documents is comparable to that of the documents already reviewed, and if there are no unexpected discoveries as the TC continues with its initial review of the technical documentation, Plaintiffs expect that by the end of the year they will be in a position to determine that the documents are substantially complete.

As described in prior Joint Status Reports, the TC has adjusted its technical documentation review by shifting the engineering resources formerly used on the prototype implementation and validation projects to direct review of the documents. As a result, the TC has been identifying technical documentation issues ("TDIs") at a higher rate than in the past. Although it understandably took Microsoft some time to shift staffing to handle the increased TDI flow, Plaintiffs are seeing positive signs regarding Microsoft's TDI resolution rate.

Hilarious. Seven years after they lost that case, they still haven't provided acceptable documentation. Every report sees hopeful signs, but all these years later, there is still no finished compliance. They never get there, despite trying and trying and trying to comply, and that's with a technical committee helping them and watching their progress. Here are all the reports. Read them and weep. The EU system doesn't even have any oversight on interoperability. Microsoft is on its honor.

And if you can't trust Microsoft, I ask you, who *can* you trust?

Update 2: Ina Fried just got off the phone with Microsoft's general counsel Brad Smith:

Smith said that the approach Microsoft took with regard to interoperability was designed to adopt methods that Nellie Kroes, commissioner for competition, had outlined in a speech last year for how companies with high market share products should behave.

"I actually think this in effect implements the model that the Commission has been advocating," Smith said. Moreover, he said it is a model that other software companies should pay attention to, he said, noting that there are lots of companies that have high market share. He noted that Google has 78 percent of the paid search market and IBM has 100 percent of the mainframe market, while Adobe also has dominant positions in certain areas, such as Photoshop.

"It is important we believe to create a level legal and regulatory playing field," Smith said. "Everyone that has a high market share needs to respect the same set of rules. I think a number of these rules are likely to be applicable to other companies and other products."

So they are making good on their threat to hold other companies' feet to the fire. As if anybody in this man's world acts like Microsoft.

When rumors of a deal began to get thick in the air, FSFE sent an open letter to Neelie Kroes, and they listed a couple of issues that need to be addressed, in their view:

For desktop applications, FSFE argues that the software monopolist must release interoperability information in such a way that it can be used in Free Software. The company must also make a binding commitment not to enforce its patents against Free Software. That would prevent Microsoft from using Fear, Uncertainty and Doubt (FUD) to keep rivals from making use of the information.
Details from the letter:
While the Commission has not yet issued a statement of objections regarding Microsoft's failure to share interoperability information with competitors, a settlement is being sought on this issue as well. Again, FSFE has analysed Microsoft's proposed interoperability undertaking, and has found it insufficient to establish competition in the European market for desktop software.

It is worth noting that in many cases, the strongest competitors with Microsoft's desktop applications are Free Software. OpenOffice is a case in point, constituting as it does the most widely used alternative to Microsoft Office. We therefore consider it essential that any settlement on interoperability ensures that Free Software can use the information provided by Microsoft to compete on an equal footing. Regarding interoperability, our core concerns are:

  • Microsoft must be required to provide interoperability information either royalty-free or in return for a one-time payment. Running royalties are incompatible with Free Software. The PFIF agreement, which resulted from the Samba case, provides a tested and working instance of such an agreement.
  • Microsoft must provide a legally binding assurance that it will not assert those of its patents which relate to the interoperability information against Free Software. The lack of such assurance would let the company use Fear, Uncertainty and Doubt (FUD) to discourage competitors from making use of the interoperability information, leaving the remedy ineffective.
In both cases, we consider that an effective settlement is much preferable to one that is quickly achieved, but lacks the power to establish competition in the European market for desktop software.
We've already learned that it is not royalty-free. And I have a question. If you can't patent software as such in Europe, how come the EU Commission allows patent licenses for a fee in Europe?

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