Microsoft Opens Windows Source Code

Microsoft caved in Wednesday and opened up the source code of its Windows Server operating system, attempting to appease the European Union and avoid a possible 2 million euro per day fine. The company's foot dragging angered both the EU and US, and Microsoft was coming under increasing pressure to comply.

The European Commission fined Microsoft 497 million euros in March 2004, and attached stipulations for compliance. One demand was a version of Windows without the company's media player software, which it released last year, and the other was to open the source code of Windows Server networking protocols to third party developers.

Microsoft initially balked at the demand, citing intellectual property concerns. A licensing program announced shortly thereafter did not go far enough, the European Commission claimed.

In December, the EU announced that its patience had worn thin with the Redmond giant and said it was beginning the process of fining the company for non-compliance.

In a statement Wednesday, Microsoft General Counsel Brad Smith seemed to chide the EU, while at the same time acknowledging that the company had to give more ground in order to settle the case until it has had time to appeal.

"We have now come to the conclusion that the only way to be certain of satisfying the Commission's demands is to go beyond the 2004 Decision and offer a license to the source code of the Windows server operating system," Smith said.

"While we are confident that we are presently in full compliance with the Decision we wish to dispel any notion that Microsoft's technical documents are insufficient."

A reference license would be given to any interested developer so they may use the source code to help their products work better with Windows; however, copying of the source code would be prohibited. Also, Microsoft may take other steps to comply with the judgement, Smith said.

But Jupiter Research senior analyst Joe Wilcox questioned the significance of the company's move. "Microsoft didn't say how much source code would be licensed. Contrary to some news reports, I expect the amount of source code to be fairly limited," Wilcox said.

"From my perspective, Microsoft's moves, its so-called concessions, are about nothing more than business. In business negotiations, companies give a little here, give a little there, but never more than the really have to. In that respect, Microsoft's behavior is consistent throughout all its antitrust dealings."

Microsoft still plans to fight the decision to share any code. The company intends to respond to the EU's objections by February 15, and an appeal hearing is scheduled for April 24 to 28.