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Interview with ECIS's Thomas Vinje and Ashwin van Rooijen on the Microsoft-EU Commission Deal, by Sean Daly - Updated
Friday, October 09 2009 @ 01:17 PM EDT

When rumors first began to fill the air that an agreement of some sort between Microsoft and the EU Commission was imminent, Sean Daly interviewed Thomas Vinje and Ashwin van Rooijen, attorneys for ECIS, the European Committee for Interoperable Systems, which is an intervenor in the case. After the EU Commission announcement by Neelie Kroes that a draft agreement had been settled, involving a month-long market test, Sean asked if either had any reaction or additional comments to make in light of the events, and here is the response:
"We will use the upcoming month of market testing carefully to review whether the changes to the ballot screen in the new proposal will result in a real and unbiased choice of browsers, and whether the suggested review mechanism will be effective.

The revised interoperability 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. It also relies heavily on private enforcement, where past experience has shown that scrutiny by public authorities is critical to ensure Microsoft's compliance with such promises."

Amen. There is plenty of sadness in the FOSS world at this missed opportunity with respect, especially. to standards. There is a month to express your views to the EU Commission, and then the curtain falls. FSFE has also released a statement today, saying Free Software is completely left out of this agreement, left out in the cold. I would characterize it, personally, that the EU Commission is abdicating on standards and interoperability, perhaps not understanding the impact this deal will have on the FOSS world.

Here's the meat of the statement:
While FSFE's input as a steadfast defender of software freedom over the past seven years has helped to bring about some improvements on details of the browser selection screen, the updated agreement proposed by Microsoft does not address the legitimate concerns of the Free Software community.

Karsten Gerloff, FSFE's President, says: "In its current form, Microsoft's proposal has many loopholes for the convicted monopolist to slip through. The lack of a monitoring system leaves Free Software projects out in the cold. There is no clear commitment from Microsoft to adhere to web standards in the future, nor to end the company's habit of adding proprietary extensions to standards."

In order to fend off another possible investigation by the European Commission, Microsoft is also offering a set of promises to let rival programs work with some of its desktop applications such as Outlook and Sharepoint. Yet Free Software projects, which are often the strongest competitors to the company's offerings, will not be able to use the patent licence proposed by Microsoft.

FSFE's legal counsel Carlo Piana says: "We are disappointed that major issues for Free Software and other small, innovative players remain unaddressed. Private enforcement is out of reach for them. This is a missed opportunity to break new ground in antitrust enforcement."

FSFE will analyse Microsoft's proposed commitment in detail in the coming weeks and provide feedback to the Commission. Our goal is to help shape a deal for a sustainable, interoperable and competitive future.

I said the other day that emailing or writing to the EU Commission was probably not what they were asking for. But on reflection, I think it's good to make a record, for history if nothing else, that the world is not full of people who share Kroes' trust of Microsoft, and that true interoperability should be available to all equally, without patent licenses and without having to pay $10,000 Euros for the "privilege". Even if the Commission doesn't understand the GPL issues with patents, Microsoft certainly does, and that they would offer such a plan as this tells me exactly how determined they seem to be to avoid competition with their chief competition.

And here is the interview transcript. For those of you who can open drop.io (Firefox has an add-on if your version is recent enough), you can get the audio now as Ogg here, but we're working on a local copy as soon as we can.

Update: We have it now, and you can download from here as Ogg. If you need something to play audio in that format, it's easy. Just download Audacity from here for Windows, Mac OSX or GNU/Linux, and it plays Ogg files beautifully.

****************************

An Interview with ECIS's Thomas Vinje and Ashwin van Rooijen on the EU-Microsoft Deal, by Sean Daly

conducted at the offices of Clifford Chance, Brussels, October 5, 2009

00:00

Q: Sean Daly here, reporting for Groklaw. I'm seated with Thomas Vinje and Ashwin van Rooijen to discuss a little bit the cases that are before the European Commission, more specifically the Directorate General for Competition.

Now, perhaps a few words of context. Commissioner Kroes is coming to the end of her five-year term in a few weeks. My understanding is that it's possible she may have an extension, a short extension;my understanding is it's possible that she may have her term renewed; I understand it's more likely someone else will come in. I won't ask you to speculate about that, but I just want to say that there is a context where it's possible there will be a changing of the guard and there's some concern right now about statements that she made recently about wanting to wrap up the, some of the outstanding cases, in particular one that concerns Microsoft. Is that your understanding of the situation as well?

01:22

Thomas Vinje: Yes, it is likely that Commissioner Kroes will not be back in the new Commission which seems likely to begin in January, so... and she has stated publicly that she wants to wrap these things up and leave a clean slate for her successor, so that seems to be correct.

01:44

Q: At the same time, to me, it seems a little bit odd, because when she came in, of course, she inherited the Monti Decision, the 2004 Monti Decision concerning Microsoft. In fact, as I remember, there was even some speculation that she might be too business-friendly, and might not carry on the work of Commissioner Monti. I don't think anyone would say that that is what has happened since. At the same time, there are a number of cases that she has outstanding. It does seem a little bit odd that she would call out the Microsoft case to be wrapped up as opposed to others.

02:19

Thomas Vinje: Yeah, it's not clear to me why Microsoft has been singled out. But I'm not sure that it's alone among those cases that she wishes to finish before she ends her term. I think she might also wish to decide what to do about the Qualcomm case for example. And she did of course finish the Intel case, at least at the Commission level, so I'm not sure that Microsoft is the only case she wants to put behind her before she leaves. But it is perhaps among a few that she does wish to put behind her, and why she singled it out is not really perfectly clear to me.

03:05

Q: All right. Now, there are two outstanding cases that we're interested in at Groklaw. First, we can talk a little bit about the tying case, the browser case. Now, there was a fairly recent development, Microsoft announcing a proposal of a ballot screen appearing in Internet Explorer, with a choice of browsers. They even put up a printscreen [PDF] of what it might look like, with Safari, and Google Chrome, and Opera. Now, I think we can agree that the devil is in the details with this kind of solution. Perhaps you can tell me what your point of view is of that proposal, of Microsoft's proposal?

04:00

Thomas Vinje: Indeed, your statement that the devil is in the details is very accurate. That's exactly what we said when Microsoft came out with its proposal towards the end of July. Unfortunately, as we have examined the proposal carefully, it turns out there are lots of devils in the details. And, indeed, as Microsoft has done in the past, it has found a way of accomodating the Commission's suggestion that Microsoft implement a ballot screen providing genuine choices of browsers to consumers in a way that will not be effective. In other words, the manner in which Microsoft has suggested implementing the ballot screen will not lead to genuine consumer choice; it will not, we believe, have the desired effect of restoring competition on the merits among browsers.

05:15

Q: And why not?

05:16

Thomas Vinje: Well, there are several reasons. For one thing, Internet Explorer will remain tied with Windows. It will remain on Windows. So the fundamental abuse will remain in place. Our notion was that after so many years of tying, a simple untying would not solve the problem. It would not act to restore competition in light of all the network effects and all of the effects that are cumulatively are in place as a result of many years of illegal tying.

So, for that reason, we -- and when I say we, I mean mainly Opera, the complainant in the case --suggested that some sort of ballot screen mechanism would be the best way of, to some extent, restoring a level playing field and restoring competition on the merits among the browsers. We don't think, actually, that at this stage, given how entrenched Microsoft's position is, that there's any remedy that will actually, really put us back in the position we were in when Microsoft began the tying in the 1990s in its successful effort to kill off Netscape. But given the range of possibilities, it struck us that this was the one that was most likely to be effective in giving consumers genuine choice among browsers and thereby to some significant degree, restoring competition on the merits among the browsers.

The problem is, though, that IE being tied with Windows and the ballot screen will be implemented as a web page via Internet Explorer. And this means that the process of being presented with and choosing an alternative browser by consumers will be extremely cumbersome and worrisome to many consumers insofar as they necessarily will be faced with a number of warnings, in particular. I'm sure most everyone is familiar with the rather dramatic, at least to many people, warnings which they receive when they download content from the Internet and such warnings would be received in the context of the operation of the ballot screen that Microsoft has proposed. So that rather than a really user-friendly, seamlessly operating ballot screen which is designed to present not some strange stuff that might come from the Internet, from some unknown source, but a very limited number of known products, specific browsers which have been concluded by the European Commission should be included on the ballot screen. But nonetheless, despite that's the only thing presented by the ballot screen, consumers will be presented with these rather worrisome warnings.

Now some people, of course, may not be worried by that, but the browser providers have very clear statistics based upon the operation of their own downloading process which indicate that as a result of these sorts of things,there is a very high abortion rate, abortion of downloads rate. And so it's exactly these sorts of cumbersome processes, and warnings and the like, which in many respects cause consumers to refrain from actually completing the download and becoming users of the alternate browsers.

And indeed, it's this download barrier to entry which the Commission identified in its Statement of Objections as one of the key aspects of the abuse being engaged in by Microsoft, one of the key elements of the tying abuse. So that download barrier to entry would remain in place. So those are some of the rather obnoxious devils that we have found in the details here, and if you'd like, we could describe what we think should be done, how the ballot screen should be implemented.

09:54

Q: Yes, I'm very interested in that. Now, let me just ask you a question. So, this would be an online page, or an offline page?

10:01

Thomas Vinje: It would be an online page.

10:02

Q: An online page. So in fact, Microsoft would have a very clear idea of who's clicking on what?

10:08

Thomas Vinje: Yes, they certainly would.

10:10

Q: How would you see a better remedy than this one implemented?

10:15

Thomas Vinje: Well, the first point is that Microsoft should implement a native application on Windows. There is no reason for it not to. We have had an engineer, a single engineer in California from one of ECIS' member companies, produce a ballot screen, a native application, and this person who is not so familiar with all of the things he would need to be familiar to implement such a ballot screen, did one in one and a half days. And it works extremely well. It has security associated with it which we find to be adequate. With a few more days, even more robust security could be employed. But it was done in one and a half days. So I don't think anyone including Microsoft could legitimately claim that a native application can't be done in a reasonable timeframe with reasonable effort.

11:16

Q: Well, I think that's true, because there's a common misperception that a browser is necessary to download a browser from the Internet. But, for instance, I have an Apple computer, and when you start up an Apple computer after installing a new system, the first thing it does is present a native application that asks for registration information, and is not at all a browser, it calls home and in fact can download extra bits of software to function. So technically speaking, I don't see what the difficulty would be implementing that solution.

11:49

Thomas Vinje: And indeed, Microsoft has itself, for other products, implemented exactly such a solution. Ashwin, maybe you wish to describe Windows Live Essentials and how it works?

12:01

Ashwin van Rooijen: Yeah, we thought Windows Live Essentials, the installation tool, at least, for Windows Live Essentials was a very interesting example. And I saw this on YouTube. Windows Live Essentials is a tool where a user can select the additional components that he or she wants to install on Windows 7. Those include things like Windows Movie Maker, and Windows Writer, I think. But the key point is that the user doesn't have to go through this cumbersome download process for each of these components, but rather, he can just select via checkboxes which software he wants to install and then one click suffices to download and install and configure all those components.

And that is more or less exactly what we think is appropriate for the ballot screen. It shows that not only it can be done, which I guess is quite obvious, but it also shows the huge advantages. Microsoft obviously wants these components deployed as much as possible, and the way to do that is through a seamless download and installation mechanism and not a series of warnings and questions.

13:11

Thomas Vinje: So clearly, it can be done. Microsoft does it itself when it sees it is in its interest to do so, and it can be done without a great deal of time and effort. Another thing which we would very strongly suggest cannot be claimed is that the very security warnings which users would be presented with in the Microsoft proposal are necessary. They are not necessary; they are not appropriate. And indeed, they don't really provide any security. I don't think that it's possible to contend that they really do provide any security. Whereas our native application, already written in a day and a half, uses existing security mechanisms to provide quite a significant degree of security, so that those who might wish to insert other software instead of the browsers would not be able to do so, and users are prevented from security risks. And they can be much, much more effectively prevented from incurring security risks via the native application than via the Microsoft's proposed web-based ballot screen.

So the bottom line is, to be very frank, we believe that Microsoft has found a way of accommodating the Commission's suggestion of a ballot screen in a way that just won't, in any significant way, work. Whereas, they're, as far as we can tell, rejecting an alternative which they themselves have used in other contexts and which we think very clearly will work much more effectively.

Another point that I think is very important to emphasize, another serious devil in the details, one might say, is that under Microsoft's proposal, Internet Explorer will remain active on the machine, fully present, unless the user, having chosen an alternative browser, actively goes through a process to turn it off. Now, our view would be, if you look at what this is supposed to be all about, how it's really supposed to work, and what the ultimate result is supposed to be, it seems to us that it would be rather natural to provide that if a user chooses an alternative browser, that Internet Explorer is automatically turned off. If a user wishes to choose Internet Explorer, he or she is perfectly free to do so; if a user wishes to choose an alternative browser as his or her default and to have Internet Explorer as an additional browser, he or she is perfectly free under the ballot screen that we propose to do so.

So we're certainly not suggesting that anyone should be prevented from using Internet Explorer, either as their default or non-default browser. But it strikes us as a perpetuation of the illegal tying for Internet Explorer to remain in place and fully active unless the user goes through a rather cumbersome process of turning it off. Ashwin, do you have anything to add to that?

16:28

Ashwin van Rooijen: Yes, I think that's exactly right. And if you add those things together, you get a situation where the user buys a PC which is -- with Windows, which is still tied with Internet Explorer, and the ballot screen only provides for a cumbersome mechanism to add a browser to Internet Explorer, not really instead of Internet Explorer. So there's not really a choice of browsers, there's just a means to add a browser to Internet Explorer, if you manage to do so. And they've done this -- they've taken very good care that adding a browser is actually very cumbersome. So those two combined means that Internet Explorer will simply remain super dominant.

17:14

Thomas Vinje: So we believe Microsoft's proposal has been designed to be ineffective and to insure that Internet Explorer's advantages from the time will remain in place.

17:25

Q: Well, it's certainly an interesting issue, the issue of an ineffective remedy, because I think the ineffectiveness of the Windows XP N remedy since Microsoft was able to charge exactly the same price for the versions of Windows that did not contain the tied components was such a spectacular failure that I understand there have even been case studies about the failure of that remedy.

Let me enlarge a little bit this topic concerning the context. Microsoft had a product that was plagued by difficulties, Windows Vista, in terms of the market. To this day, there are still machines being sold with Windows XP on them. Microsoft has had difficulty organizing an offer for netbooks, which are actually the fastest-growing market segment for small computers, for all personal computers. Microsoft is looking forward to launching Windows 7 later this month. They have repeatedly, I believe, argued to the Commission that failure to resolve this situation quickly will have a negative impact on the sales of PCs and therefore an impact beyond Microsoft,to suppliers of PCs, we're in an economic context that's difficult and so forth. Would you care to address that?

19:08

Thomas Vinje: Well, it is conceivable that that is true, and I should emphasize that Opera and all of the other intervenors who are supporting the Commission's case here -- Google, and Mozilla, and ECIS [PDF], and the Free Software Foundation Europe, and others -- very much favor a rapid resolution of the case. And indeed, Microsoft has suggested that it be given a number of months to implement its proposal. And we've suggested, you know, Why do you need so much time? We don't see any reason whatsoever for that.

So Opera, the complainant, and those who are associated with it in a sense as intervenors in the case, contrary to what some have suggested, wish this case to be resolved as rapidly as possible and for the remedy to be implemented as fast as possible. And if that helps with respect to the launch of Windows 7, and that helps both consumers and the PC industry to make that a seamless launch, that is certainly all the much for the better.

20:17

Ashwin van Rooijen: Well, then, I think in addition, the ballot screen, at least in the proposal, is also supposed to be deployed through Windows Update. And so this shouldn't really cause any sort of real delays, because this screen is supposed to be deployed also to other systems -- Windows XP, and Windows Vista --

20:41

Thomas Vinje: Existing --

20:42

Ashwin van Rooijen: Existing -- the existing installed base. And so there's no reason why this should delay any shipments, actually.

20:49

Thomas Vinje: Yeah. But again, indeed, I would emphasize, because some have suggested -- at least I saw one comment suggesting that Opera simply wishes this case to go on forever, and that is absolutely untrue. Opera has been suffering from the illegal tying behavior since 1996, and it wishes for the abuse to end and for it to be effectively remedied as fast as possible. But we don't want an overly rapid resolution of the case which leads to an ineffective remedy. If the choice is taking some more months to resolve the case effectively rather than having a very, very rapid conclusion within the next few weeks which leads to an ineffective remedy, then we certainly choose the former.

21:42

Q: Well, I mean, concretely, how could that work? If consumers want to buy a PC in the store starting October 22nd, what's installed on it?

21:55

Ashwin van Rooijen: Well, there's -- I imagine that those, if Microsoft has not managed to program the ballot screen before that in the way that we have suggested, I imagine that they will do so as soon as possible and that it will be deployed through Windows Update.

22:14

Thomas Vinje: Yeah. And I must say, I don't know exactly the answer to that question. It lies in large part, in the hands, of course, of Microsoft and the OEMs. And no arrangement has been reached, and since this would be a formal remedy, adopted pursuant to a Commission decision, there needs to be a market testing period for it [PDF], so it couldn't be in place by October 22nd. And even if there were, obviously there needs to be some time to implement it, it can't be implemented overnight. So I guess I'm assuming that on October 22nd, whatever machines are launched will be launched with the existing scenario, with Internet Explorer tied just as it has been for many years.

22:59

Q: Now let's cite the case of Firefox. Firefox, which was born from the ashes of Netscape, has managed to do what no one five years ago even thought was possible, to put a serious dent in Internet Explorer market share. Some might argue that if Firefox was able to do so without any remedies being in place, why hasn't Opera been able to do so? And yet Mozilla supports this remedy, is there an explanation for how Firefox has been able to achieve this?

23:40

Thomas Vinje: Nobody knows for sure exactly how that happened. I do know that the Mozilla people believe that the fact that Firefox is an open source product, that there's a very strong community behind it, a sort of a movement, as they describe it, behind it, that that has had a very significant effect. And that in some countries where those things matter a lot, such as some Eastern European countries, and Germany, that that has been a significant force behind Mozilla's relative success.

Opera, of course, doesn't have those benefits. I think the Opera people believe that in light of the fact that it's a small Norwegian company that has had to make it on its own -- the Opera browser was coded about the same time as the original Netscape code, 1994, so it's been on the market since 1994, it's had to make it on its own, as a commercial company, on purely its own merits. And it has a single-digit market share, but nonetheless, the Opera folks believe that they do pretty well in light of all of the obstacles that they face and especially, of course, the tying of Internet Explorer with the monopoly operating system.

I should add one I think very important point relating to the success that Mozilla has managed to have, to some extent, with Firefox. One shouldn't exaggerate that success, because it still has, you know, 20% market share around the world. That's a significant result, and certainly I applaud it greatly, but one shouldn't exaggerate it, it still leaves Internet Explorer with the dominant position on the market.

And I think what one needs to look at in that context is, if you look at the whole range of objective reviews of browsers, Internet Explorer virtually always comes out last. Firefox, along with others, is I believe by almost unanimous view, regarded as being really very substantially, I think to put it mildly, better than Internet Explorer in terms of speed, and security, and other features which are very important with respect to browsers. And so, how could it be that the browsers which are regarded by every independent reviewer -- are regarded to be significantly better -- how is it that they have cumulatively a substantially smaller market share than Internet Explorer has on its own? And certainly, our view is that it's only by virtue of the tying with the monopoly operating system that Internet Explorer manages to hold any substantial market share. Because if one looks at how markets normally work, normally, the better products have a substantially greater market share, and in this case, it's just very dramatically the opposite. So that would be one observation we have on that point.

27:23

Q: I understand that Microsoft sponsored some studies which show that their browser is much better.

27:27

Thomas Vinje: Ah, we haven't seen those. (laughter) But I guess that perhaps doesn't surprise me.

27:33

Ashwin van Rooijen: They must have been expensive studies. (laughter)

27:37

Q: All right. Perhaps we could switch gears. I would like to talk a little bit about the other investigation underway with the Commission, concerning interoperability. Now, I think this year you're celebrating 20 years of ECIS, is that right? Working for interoperability?

27:58

Thomas Vinje: Indeed. This month, actually, it's 20 years.

28:02

Q: Congratulations. So, this case was also started a little less than two years ago, I believe. What's happening with that case, are you aware?

28:13

Thomas Vinje: Well, the Commission -- this is a case basically related to interoperability, and Microsoft's failure to provide adequate interoperability information with respect to a number of products and an adequate legal framework surrounding the disclosures that it has made, the interoperability disclosures, and it has indeed been going on for a few years now,the Commission has been investigating it seriously, it was made a priority investigation and so the Commission has now undertaken negotiations with Microsoft about a possible resolution of it. Unlike the browser case, there is no Statement of Objections in place. The Commission has not formally issued what some call a "charge sheet" in that case. And so, unlike the browser case, where a Statement of Objections does exist, and therefore the case would be resolved by a formal Commission decision and basically the agreed resolution would be adopted in a Commission Decision and therefore be binding against Microsoft, enforceable against Microsoft, in the ECIS case, the interoperability case, there is as yet no Statement of Objections and that would be resolved by a more informal "undertaking" by Microsoft, similar to the undertaking which IBM gave in 1984 with respect to the disclosure of interoperability information and which remained in place until 1995. So, there would be this informal undertaking by Microsoft related to the interoperability case.

29:58

Q: Is there concern that Commissioner Kroes would want to, try to wrap up that investigation before she leaves also? Or would that be limited to the tying case?

30:10

Thomas Vinje: Our understanding is that both are being pursued. In other words, resolutions of both cases.

30:17

Q: All right, and speaking of the Statement of Objections, it seems to me there was a very interesting thing that happened when Microsoft requested a hearing. Isn't that the case, when there's a Statement of Objections, the company in question can request an oral hearing. And there was a big disagreement about the dates that were chosen. I believe Microsoft was concerned that competition commissioners of the member states, who are not part of the Directorate General for Competition, would not be present because of an event in Zurich. Is that what happened?

30:56

Thomas Vinje: That was the professed reason why Microsoft objected to the dates set for the hearing. We were surprised by that, insofar as myself having participated in a number of hearings over the 20 years I have been in Brussels, I have never seen such senior officials from the national member state authorities appear at such a hearing and indeed, I would be surprised if it ever happened. So it struck us as a rather surprising reason to cancel the hearing.

31:39

Q: Now, back to interoperability, Microsoft succeeded I guess about a year and a half ago to obtain the stamp of the ISO on their document format, OOXML. There has been of course, an alternative format, an unencumbered format called OpenDocument Format. Do you think it's possible that Commissioner Kroes would not take into account the importance of an open document format in her negotiations? She recently made a speech in Munich, I believe, where she described very concretely the importance of interoperability for document formats. And in fact she even stated that a government should not require its citizens to use a proprietary format, that requires a proprietary product.

32:41

Thomas Vinje: Well, indeed, Commissioner Kroes has been a very strong proponent of open standards generally, and open standards procurement including open format, OpenDocument format procurement and use by governments. And we certainly very much applaud that. She's been a great trooper in that regard. We do have serious concerns, however, that the proposed undertaking, the undertaking proposed by Microsoft to resolve the ECIS interoperability case, would not at all adequately address the standards issue. As we read the document, at least, essentially what it says is that Microsoft will implement standards unless it tells you that it's not going to. Which would be kind of like saying, you know, We're not going to charge for our product unless we tell you we're going to. So -- Ashwin, you might have some observations on this as well, but it doesn't seem to us, at least, that the standards provisions in the proposed undertaking will be effective.

33:52

Ashwin van Rooijen: I think that's right. If you read in particular Paragraph 8 of the undertaking, it says what Thomas just mentioned. It says "We shall implement required portions of applicable standards by either implementing that portion, or not implementing it, as long as we disclose where we haven't done so." I think, you know, everyone in the industry should be concerned about that provision, because it means that whatever follows next, which is the list of specific standards that they intend to support, all those standards, including ODF, fall under that regime. So it means that whatever standard is mentioned -- and I should add that a lot of standards are actually missing from this list. But those standards that are mentioned can all be supported in the way that Microsoft proposes by not implementing them at all, as long as Microsoft says "This is where we haven't implemented those standards."

34:56

Thomas Vinje: So we certainly hope that improvements will be made to the language on the standards point before any undertaking would be accepted by the Commission.

35:08

Q: All right. If I may ask a question about patents. My understanding is that software is not allowed to be patented in Europe, and yet it seems to me that the EU Commission has allowed Microsoft to charge for software patent licenses. Is that the case or not?

35:31

Thomas Vinje: Well, Ashwin may wish to supplement my response on this. I'm not sure that I, at least, would agree that it's not possible to patent computer-related inventions in Europe. There is of course, the prohibition on the patenting of software as such in the European Patent Convention, but that nonetheless leaves a fair degree of scope for the granting of computer-related invention patents. And so I think that sometimes the differences between the United States and Europe are exaggerated in that respect.So the answer is that there are quite a lot of such patents existing in Europe. Whether that's a good thing is an entirely different question, but they do exist. And of course, that issue, the granting of such patents, is an issue for the patent offices, and to some extent, the part of the European Commission dealing with intellectual property issues, and whether patents are to be granted or not is not really a question for DG-Competition.

But it is indeed correct that the Commission has, in the context of the previous case and in the context of this case, allowed Microsoft effectively to charge royalties for patents. We have serious concerns about this insofar as the approach which has been allowed does, to a very significant degree, prevent the resolution of the earlier case and the possible resolution of the existing case from being employed by open source developers. Ashwin, you may have something further to say about that?

37:32

Ashwin van Rooijen: Yeah. Well, I think the open source issue is important. In many markets, Microsoft faces meaningful competition -- any meaningful competition -- only from open source developers. So it is very important that they can actually create interoperable products. And the current template patent license that was part of the undertaking -- I believe it was Annex C of the undertaking -- is clearly not compatible with open source licensing schemes and especially not with the GPL. It requires, for example, that developers that take a license, that take a patent license, notify all the other developers that they distribute the software to of the various patents which Microsoft claims to have in its software. And obviously, that's an obligation which cannot be reconciled with the GPL. And there are other provisions as well which I think would need to be resolved.

38:34

Q: Well, there's also been a history of Microsoft claiming patent infringement, but not communicating the numbers of the patents in question.

38:42

Thomas Vinje: That's been a very serious issue indeed. And patent FUD, in that regard --

38:48

Q: Fear, Uncertainty, and Doubt.

38:49

Thomas Vinje: Fear, Uncertainty, and Doubt, which we certainly believe and has been engaged in to cause concern mainly among potential consumers of open source software about potential patent liability. That's been a serious concern. There are some things in this proposed undertaking that would help to address that problem. And we should say more generally that not everything in the proposed interoperability undertaking is bad; there are some very serious problems with it, some really rather obnoxious devils in the details --

39:28

Q: Could you be more specific?

39:29

Thomas Vinje: Well, we've been talking about the patent one, and the standards one, and we could address other ones as well. But nonetheless, there are some -- we're not certainly saying that it's unsavable -- I mean, this is a document which could be modified and turned into something which would be very useful. Not necessarily a panacea, it's not going to change the landscape of the industry and make it competitive tomorrow in ways that it isn't today, or even next year in ways that it isn't today, but it potentially would be a very useful arrangement. Ashwin, I've spoken a lot, why don't you mention some of the other devils in the details of the proposed interoperability undertaking?

40:12

Ashwin van Rooijen: Well, I think if you read the undertaking for the first time, I think at least superficially, it looks like a good document. It is really important though that Microsoft implements this and complies with all the promises it makes faithfully. And that's where I think our concern comes from, because in the past, they have shown that they don't exactly implement these things faithfully, but they will look for every single word in the document to see what they can exploit in their favor. And unfortunately, this has been said many times now, there are a lot of devils in the details so there is a lot of room for that.

And the other thing is, because the undertaking -- the legal status of the undertaking -- it is a promise. It is not something that the Commission can enforce directly. And so it's very important how this thing is actually going to be enforced. And therefore, the warranty agreement that is part of the undertaking is very interesting. So Microsoft offers a private warranty agreement that companies can conclude with Microsoft, and that would allow these companies to enforce -- you would expect the undertaking -- to enforce the undertaking in court. But there are a number of problems with the warranty agreement. The most striking thing, I think, is that the warranty agreement says the undertaking is not part of this agreement. So what looks like a warranty to the undertaking is actually a completely separate document, and indeed it redefines all the promises that are in the undertaking in the warranty agreement in a much more limiting way.

And that, obviously is a great cause of concern. I think the definition of interoperability information, for example, is a good example. The undertaking mentions that interoperability information includes the complete and accurate specifications of various products. The warranty agreement redefines interoperability information to say "whatever information we have posted at the MSDN website". So it says nothing more than "This warranty is for the information as we decide to disclose it".

42:35

Thomas Vinje: Rather than a warranty that "We will disclose complete and accurate interface specifications". So, two quite different things.

42:45

Q: So, now, has Microsoft built up some good faith in the resolution of the previous network protocols case? They've been working with Samba, my understanding is that the Samba Team obtained the documentation that they needed, that they've been able to work. Hasn't that been positive?

43:07

Thomas Vinje: Yes. There have been some positive things to have come out of the Commission's 2004 Decision. Eventually. It took a long time and hundreds and hundreds of millions of euros in fines before there was finally some significant degree of compliance; we believe there are still serious issues of compliance. But are we saying that the Commission's efforts from 1998 to its Decision in 2004, and its efforts subsequently to enforce the 2004 interoperability decision, have been for naught? No. We are certainly not saying that. There have been some benefits, and to some extent those benefits are showing up, one might say, in the Samba context.

We need to be careful of course, because Microsoft has incentives to do certain things now which they might not have if all this was put behind them. So it's very important that whatever undertaking is put in place now is robust and solid and loophole-free, because the incentives might be quite different after this is put behind them than they are right now.

44:24

Q: All right, I think that wraps it up for me. is there anything else you'd like to express that we didn't talk about today?

44:32

Thomas Vinje: Maybe we could go back to one thing that you mentioned earlier, the overall context. And you mentioned one previous ineffective remedy, namely the remedy for the Windows Media Player case which was indeed ineffective. And frankly, we, ECIS, suggested to the Commission at the time that it would be ineffective, but they chose to be very cautious and I think they wanted to insure that they would win the case and were therefore very, very cautious about the remedy they put in place, and ultimately they were clearly shown to be too cautious, and it just didn't work. But, as you say, there is an overall context here; that wasn't the first time. There was of course the 2001 US settlement, which I don't think there are many outside Microsoft's orbit who would claim has been effective. And many people are very well aware of all the problems that have been associated with that settlement and it simply has been a settlement which was not effective in restoring competition in the markets affected by it. But we can go back further to the end of 1994, beginning of 1995, when there was a joint resolution of the first serious investigation of Microsoft between the European Commission and the US Department of Justice. There was a Consent Decree issued in the United States and an undertaking here in Europe, and that presented exactly the same sort of thing that we feel we're facing today, where devils were in the details.

And I'll just note one example, where there was a provision in that undertaking and Consent decree which prohibited tying. But at the very last moment, Microsoft -- and if I remember correctly, I think it was Bill Gates phoning Anne Bingaman, then head of antitrust for the Justice Department, himself, suggesting that Microsoft should be allowed to integrate products into its monopoly products. And language along those lines was added. And it's precisely that language that Microsoft then claimed allowed it to undertake tying which we certainly believe to violate the antitrust laws and certainly has caused a great deal of inhibition of competition of the marketplace.

So there's quite a long history here of investigations being pursued and Microsoft very intelligently finding ways of dealing with the details in the way that leaves lots of devils in them and that renders the resolutions, unfortunately, ultimately ineffective. Now we certainly, very, very much applaud the European Commission's work, both in the 2004 Decision and in its pursuit of the two cases pending before it now. The case teams have been excellent, I mean, they really have sunk their teeth into the technologies. I don't believe there are any antitrust officials anywhere else in the world who are more knowledgeable, indeed there may be none who are as knowledgeable about these technologies as the officials in DG-Competition. I think they've handled the cases very, very fairly, they've been very -- they've paid very close attention to the facts, and based what they've done really on a very careful evaluation of the facts. And the hierarchy has also been very -- has paid a lot of attention to these cases, has sunk its teeth into the details. And Commissioner Kroes has certainly shown herself to be not what people feared, as you said -- people feared that she would be too business-friendly, and just let people off with things they shouldn't be allowed to get away with -- that's certainly not proven to be true. She's been tough in a number of areas, including with respect to these cases.

And so, based upon that history, we certainly hope that the Commission will insist that these proposed settlement documents be modified in ways that make them effective and that we won't be sitting here a few years from now saying the same thing about these settlements as we can now say about the previous ones.

49:38

Q: Well, certainly in the past, there's been an aspect of high-level contact directly influencing the situation. I remember Commissioner Kroes describing how she sat down with Steven Ballmer at a quiet restaurant in the Netherlands, and I noted with interest that Steven Ballmer is touring Europe this week and will be in the Netherlands later this week -- (laughter)

50:03

Thomas Vinje: I don't know, maybe they will be having another meal together. (laughter) We shall see.

50:08

Q: All right, well, thank you very much for taking time with me today.

50:10

Ashwin van Rooijen: Thank you.

50:12

Thomas Vinje: Thank you very much Sean, it's always a pleasure.


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