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EU warns Microsoft of new fines

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The European Commission has warned Microsoft it could face further penalties over what it calls "unreasonable pricing" of interoperability information.

Microsoft was ordered to make details of its protocols available to rivals when it was found guilty of anti-competitive behaviour in 2004. Today, the commission sent Microsoft a "statement of objections" detailing exactly why it thinks the software firm is charging too much for access to its protocols.

In the statement, Commissioner Neelie Kroes argues that the firm agreed the cost of access to its protocols should be determined by how innovative they are. Now the EC says the protocols are not innovative enough to justify the prices Microsoft is charging.

For its part, Microsoft says analysis of its proposed cost structure carried out by PriceWaterhouseCoopers found the prices for access to its code are "at least 30 per cent below market rate for comparable technology". It also argued that its protocols are innovative, and it's always been prepared to negotiate prices with potential licensees.

In a teleconference with the press this afternoon, Brad Smith, general counsel for Microsoft said: "We submitted a pricing proposal to the commission in August last year and have been asking for feedback on it since that time. We're disappointed that this feedback is coming six months later and in this form."

He added that Microsoft has not yet received the full statement from the commission, and has only seen the press release so far, but that based on that he has a couple of significant concerns.

"The press release appears to suggest a new approach for price regulation of technology. It suggests that the test of innovation should be applied to exclusion of all others, and that only technology that is patentable will be considered innovative. This is a significant change in government policy."

He added that the policy was also being applied on a worldwide basis, an approach that could cause chaos if it was taken by many governments, as it would inevitably lead to conflicting rulings.

The company has four weeks to formally respond to the commission, after which it will be entitled to a hearing. ®

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