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. Last Updated: 07/27/2016

EU Accuses Microsoft of Monopoly

BRUSSELS, Belgium -- The European Union added to Microsoft's legal woes Thursday, opening an anti-monopoly case alleging the software giant is abusing its market position in operating systems to dominate the market for server software.

The European Commission, the EU's executive arm, started the proceedings after a complaint from Sun Microsystems, another U.S. company, which accused Microsoft of breaching anti-monopoly rules by engaging in discriminatory licensing and refusing to supply essential information on its Windows operating systems.

John Frank, Microsoft's legal director for Europe, said Sun Microsystems' complaint "is based on its desire to gain access to our technical trade secrets."

Amelia Torres, spokeswoman for EU Competition Commissioner Mario Monti, said the EU has sent what is called a statement of objections to Microsoft, which now has two months to reply. After that the Commission has a few months to make a formal decision, but that is unlikely before the end of the year, Torres said.

"The Commission hasn't come to any conclusions," she said, but it is taking the allegations of misconduct very seriously. "The Commission obviously wouldn't send the statement of objections unless it had good evidence of misconduct."

If the EU concludes there is anti-monopoly abuse it could fine the company up to 10 percent of its annual global sales. However, in practice, EU fines have never exceeded 1 percent. In Microsoft's case, with $22.96 billion in annual revenues, even a 1 percent fines could amount to $230 million.The EU is looking into allegations that Microsoft "extended its dominance in the PC operating systems market to the server operating systems market." A server is a computer or device on a network that manages network resources.

The EU case differs from the U.S. Justice Department anti-monopoly case, which claimed Microsoft protected its dominance in PC operating systems through measures aimed at weakening Netscape Navigator and Sun's Java system, and a federal judged ordered Microsoft broken in two and imposed restrictions on them. That decision is under appeal.

"We will not tolerate the extension of existing dominance into adjacent markets through the leveraging of market power by anti-competitive means," Monti said in a statement. "All companies that want to do business in the European Union must play by its anti-monopoly rules and I'm determined to act for their rigorous enforcement."

Sun Microsystems says Microsoft's near monopoly f 95 percent of the market for personal computer operating systems f "creates an obligation for Microsoft to disclose its interfaces to enable interoperability with non-Microsoft server software," the EU said.

Microsoft replied in a statement that it already makes available its software coding and other information necessary for competitors to make server software that is interoperable with its market-leading Windows PC software.

"Access to this information is readily available at any bookstore, on any Microsoft web site or at any developer conference f all of which are available to Sun," the company said.

The EU says Microsoft refused Sun's request for interface information in October 1998, which would have covered Windows 95 and 98, NT 4.0 and all subsequent updates. Sun alleges the launch of Windows 2000 was the final step in a strategy to drive all serious competitors out of the server software market.

Sun also claims Microsoft "applied a policy of discriminatory licensing by distinguishing between its competitors according to a so-called 'friend-enemy' scheme," the EU says, adding that Microsoft did not meet requirements to "disclose sufficient interface information about its PC operating system."

The EU said it believes Microsoft gave information only on a partial and discriminatory basis to some competitors and refused to supply interface information to competitors like Sun.