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Microsoft Accused of Hijacking Interoperability

The European Court of First Instance heard from experts today whose testimony excoriated Microsoft for holding the workgroup server market ransom by refusing to allow competing systems to communicate effectively with Windows servers.

They also told the court that Microsoft is using its growing strength in the workgroup operating systems market to muscle out the competition.

The case is an appeal by the Redmond, Wash.-based company of an earlier European Commission antitrust ruling that it characterized yesterday as "the largest encroachment of intellectual property in European" competition history.

Microsoft argued that it should not be punished for having pioneered interoperability protocols -- the standards allowing different kinds of servers from communicating effectively -- by being forced to turn over the fruits of its labors to its competitors.

Today, witnesses for the European Committee for Interoperable Standards (ECIS), which counts Oracle, Sun Microsystems, and other Microsoft rivals among its members, had their turn at the bar.

Antitrust expert William Bishop argued that with 70 percent of the workgroup server market, Microsoft's position is so dominant that competition has been relegated to "a shrinking fringe."

However, Townsend Feehan, a Brussels-based lawyer for Microsoft, told that while the 70 percent could be accurate, it was essentially meaningless.

"The market has been arbitrarily defined [by the European Commission], and as defined, Microsoft may have 70 percent of that market. But it's been defined in a manner that nobody else recognizes," said Feehan.

But the crux of the case may well rest on whether or not the judges accept Microsoft's argument that it was an innovator in the field of interoperability, or whether they agree that it has unfairly withheld those crucial protocols.

Ronald Alepin, an independent consultant and former CTO for Fujitsu, disputed the idea that Microsoft had been an innovator in the field.

He said that interoperability protocols were developed by companies other than Microsoft, and that Microsoft has simply extended the protocols and then refused to disclose the extensions.

In so doing, he told the court, Microsoft "has hijacked standard interoperability protocols agreed by the entire industry."

"Microsoft can and is putting limits on what kind of interoperability third-party workgroup servers can offer by refusing to disclose interface information."

A person close to Microsoft disputed that contention.

"I don't think that's a fair statement," the source said. "Microsoft does a great deal and works with others in bodies that deal with interoperability."

However, according to another witness today, Andrew Tridgell of the Free Software Foundation Europe, Microsoft has not participated in interoperability conferences in five years.

Alepin also testified that IT customers running Windows elsewhere will be reluctant to implement workgroup servers made by other vendors if they know that those servers won't work effectively with the ones running Windows.

"IT customers won't consider a third-party server if it means a reduction in overall functionality of the workgroup or a reduction when compared to a Windows server," he said.

Joe Wilcox, an analyst with JupiterResearch, supported that view. He told that interoperability is "the top priority among IT managers in most categories that we look at."

Wilcox noted that, having conquered the desktop market, the server market is the biggest growth opportunity for Microsoft. He said that Microsoft's strategy has been to increase the integration between back-end server software and front-end desktop software in order to extend its reach further into the server software market.

Extending into servers can also help drive more sales of upgrades to desktop software, he said.

"Microsoft gets a potential two-fold benefit" from pushing into the server market, said Wilcox.

Antitrust expert Bishop echoed that sentiment, noting that Microsoft's market power "allows it to extract more monopoly rent from users of Windows networks."

EC spokesman Jonathan Todd refused to comment, saying he would wait for the court to issue its ruling later this year or next.

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