Microsoft claims breakthrough at EU antitrust hearing

Microsoft  left a two-day antitrust hearing in Brussels Friday claiming it had reached a breakthrough with European regulators in a dispute that may still result in the company being fined up to €2 million ($2.4 million) a day.

But the claim of a breakthrough was exaggerated, according to two other people involved in the closed-door hearing -- one person representing rival software companies and a person close to the European Commission, the European Union's top antitrust authority.

The Commission has accused Microsoft of failing to provide adequate technical details about its Windows operating system. The Commission ruled two years ago that by withholding this information, Microsoft was stifling competition in the software industry. Microsoft maintains that it has provided the information, which would allow competing makers of server systems to design programs that work as well with PCs running Windows as Microsoft's own server software.

But in December, professor Neil Barrett, the British computer scientist picked by both Microsoft and the Commission to oversee the company's compliance with the 2004 ruling, dismissed the technical documents on offer as "unusable." As he left the hearing Friday evening, Brad Smith, Microsoft's top lawyer told journalists he was "very encouraged when professor Barrett presented his plan to move forward."

Barrett "described in greater specificity than we have ever received before" ways the documentation should be "changed and improved," Smith said. "Certainly for our engineers who had the opportunity to talk directly with professor Barrett during these two days, we finally started to get the kind of engineering guidance that we need," Smith said.

"He described some further details of what should be included and the style in which it should be written. This gives us the start of a real blueprint and it finally answers some of the questions that we have had for some time," he added.

Barrett has been ordered to not talk to journalists, but Commission spokesman Jonathan Todd said no new plan was presented. "He is an advisor, he doesn't make plans," Todd said.

"There was no new plan," said Thomas Vinje, a partner in the Brussels office of law firm Clifford Chance. Vinje represents a software industry trade group called the European Committee for Interoperable Systems, comprising some of Microsoft's biggest competitors including Oracle Corp. and Sun Microsystems Inc.

Barrett said at the end of the hearing Friday that his initial doubts about the value of Microsoft's documentation were confirmed, according to Vinje.

"In his final summing up he talked about ways forward by identifying the problems Microsoft must solve. That's not a plan," Vinje said.

"The only plan professor Barrett has presented was in January, when he proposed that he work with Microsoft engineers to improve the documentation," Todd said. The professor went to Microsoft's headquarters in Redmond, Washington, in January to begin the collaboration, Todd said.

Microsoft's talk of a breakthrough might be the first sign of backing down, said one of the people at the hearing. "By saying the contacts with the trustee were constructive is admitting that the documentation on offer has been insufficient," the source said.

"Microsoft has been playing games with the Commission from the beginning, but now it realizes its time is up," Vinje said. Daily fines could be imposed in the coming weeks.

Microsoft could face another lawsuit in the coming months over the way it plans to charge licensees for access to the technical documentation. In December the Commission warned that it wasn't happy with the pricing plan, but kept this issue separate from the one being discussed at the hearings Thursday and Friday.