Microsoft drops legal challenges against EU

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BRUSSELS -- Microsoft Corp. said Wednesday it had withdrawn the two last challenges to an EU antitrust order -- a move that shuts the book on its past legal fights and lets it focus on avoiding future trouble with European regulators.

After a battle with the European Commission that lasted for years and cost hundreds of millions of dollars in fines, the world's largest software maker yielded Monday when it pledged to comply with key parts of a 2004 antitrust decision that an appeals court upheld last month.

Microsoft said Wednesday that it told the EU's appeals court it was dropping a challenge to the 280.5 million euros ($357 million) fine that regulators imposed in July 2006 for not complying with an earlier demand that it share technical information with rivals.

It also withdrew a second appeal that asked the EU's Court of First Instance to annul the commission's order that Microsoft license its intellectual property to open source systems such as Linux.

The company said this was now moot following the deal with regulators announced Monday that will change how Microsoft licenses interoperability data to open source developers -- including nonprofit groups that circulate software freely without charging or paying usual license fees. It is unclear how much information will be available to open source groups.

The European Commission declined to comment on Microsoft's latest move.

In late morning trading in the United States, Microsoft shares dropped 8 cents to $30.82.

Microsoft had filed the appeals over the past several years as it battled what it called an unclear and unfair EU order. That order aimed at helping rivals such as IBM Corp., Novell Inc., Oracle Corp. and Sun Microsystems Inc. make software for server computers that would work smoothly with Microsoft's Windows desktop operating system, which is found on 95% of all personal computers.

Sun triggered the EU investigation nine years ago when it complained that Microsoft was breaking with industry norms by refusing to supply basic interoperability information.

Microsoft had claimed these server protocols were trade secrets that were too valuable to be given away. Under duress, it agreed to license them, but the EU said the fees Microsoft wanted to charge were exorbitant and has threatened new fines.

Before the July 2006 fine, Microsoft had paid a 497 million euros ($613 million) penalty -- the largest ever imposed by EU regulators on one company -- after the March 2004 ruling in which the Commission found the company guilty of abusing its powerful position by refusing to supply necessary data to server rivals and by trying to squeeze out media player competitors.

Microsoft earlier said it would not appeal a Sept. 17 ruling from the EU's second highest court that backed regulators.

"We believe its important at this stage to focus all of our energies on complying with our legal obligations and strengthening our constructive relationship with the European Commission," said Microsoft's European general counsel Erich Andersen.

EU Competition Commissioner Neelie Kroes warned Monday that the company was not completely in the clear because it has ongoing obligations and could still face penalties for overcharging royalties on interoperability information.

She warned that the EU order set a precedent for Microsoft's future behavior for other areas -- such as its Office software and its new Vista operating system.

"Microsoft should bear this in mind," Kroes said. "The shop is still open, I can assure you ... there are a couple of other cases still on our desk."


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