Sun after MS trade secrets, says MS

Following a formal legal warning from the European Commission over its Windows 2000 operating system, Microsoft has cast the debate over its software practices as jealous, mean-spirited accusations by a disgruntled competitor.

The EC has been investigating Microsoft's activities in the server market for more than a year, based on a complaint by server maker Sun Microsystems, and formally launched a probe in February. The commissioner in charge of competition, Mario Monti, sent Microsoft Thursday a "statement of objections... for allegedly abusing its dominant position in the market for personal computer operating systems software by leveraging this power into the market for server software".

Control of the server market is increasingly important. Servers are the powerful computers that "serve" Web pages and other information across the Internet.

The EC accuses Microsoft of failing to provide server makers with enough data about the inner workings of the Windows client operating system to ensure their server products are fully compatible. Microsoft, according to the EC, then has the power to claim that only its own servers are fully compatible with Windows -- a claim that could help it wipe out competitors in that market.

Microsoft disagrees. "Sun's complaint is based on their desire to gain access to our technical trade secrets," said John Frank, director of law and corporate affairs at Microsoft (Europe, Middle East and Africa), in a published statement. "We don't believe that the law requires Microsoft, or any other company, to share its secrets with direct competitors."

The software giant, which is appealing a US Federal court decision to split it up, says its APIs (Application Programming Interface) are widely available, and claims its operating systems are compatible with those of its competitors. Critics argue, however, that many of the important Windows features that might ensure interoperability are not available in the published APIs.

"As always, we remain confident that once the Commission has had a chance to review the information we will provide, we will find positive resolution to this matter," stated Frank.

Furthermore, Microsoft argues the whole issue is merely ill-tempered sniping on the part of Sun -- a long-standing feature of any debate over Microsoft's alleged monopoly status. "We are very disappointed by Sun's continued effort to use government intervention to overcome the fact that Microsoft's products are outperforming theirs in the marketplace, and for one third of the cost," Frank stated.

Jean-Philippe Courtois, president of Microsoft EMEA, argued Sun's complaint merely demonstrates Microsoft products' superiority. "In a way, the fact that they [Sun] feel a need to fight the product battle with legal intervention is the best proof point we have of the real value our products bring to market," he said in a statement.

According to the EC's evidence, Microsoft's growing presence in the server market has little to do with technical superiority. "The Commission believes that Microsoft gave [operating system] information only on a partial and discriminatory basis to some of its competitors. It refused to supply interface information to competitors like Sun Microsystems," the commission said in a statement.

"Without interoperating software and as a result of the overwhelming Microsoft dominance in the computer software market, computers running on Windows operating systems would be de facto obliged to use Windows server software if they wanted to achieve full interoperability," the commission stated.

Commissioner Monti acknowledged Microsoft's concerns over trade secrets, but said such concerns are less important than heading off monopolistic activity. "Effective protection of copyrights and patents is most important for technological progress. However, we will not tolerate the extension of existing dominance into adjacent markets through the leveraging of market power by anti-competitive means and under the pretext of copyright protection," Monti stated.

The EC's probe is separate from the US antitrust case now under appeal. In the US case, Microsoft was ordered to split into two -- presumably separating its operating system and software businesses. Interestingly, such a split would not affect the EC's investigation, which deals with one operating system being used to push another into prominence.

The commission said it had been collecting evidence following a Sun complaint of December 1998. Sun said the launch of Windows 2000 in February was "a final step in Microsoft's strategy to strengthen the effects of its refusal to supply interface information", according to the EC.

Sun declined to comment but, in a statement, said the EC's investigation had included input from Sun "and others in the industry". The statement did not specify who else had been involved.

Microsoft recently agreed to step back from a majority stake in UK-based telecoms provider Telewest, after EU pressure.

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