Washington, D.C. – Citizens Against Government Waste (CAGW) today criticized the European Commission for threatening Microsoft with new fines over the price the company charges other vendors for interoperability information.  The commission based its position on its view that “there is no significant innovation in these protocols.”

“The European Commission continues its assault on the intellectual property of an American company,” CAGW President Tom Schatz said.  “As a regulatory body, the Commission does not invent anything, so it is in no position to judge what is ‘innovative.’”

The Commission ruled in 2004 that Microsoft violated antitrust rules by not disclosing the server code that would help rival companies compete with its products.  Microsoft appealed and a new decision is expected this year.  Despite the unfinished process and the flaws in the EC’s case recognized by the European Court of First Instance, Microsoft has had to comply with unprecedented and ongoing punishments:  Handing over valuable intellectual property to its competitors; unbundling its software; paying a $613 million fine; and paying a new $1.5 million per day fine retroactive to December 2005.  Microsoft has four weeks to reply to the latest charges.

  “The dozens of patents tied into this protocol technology belies the Commission’s contention that there is nothing ‘innovative’ about it,” Schatz continued.  “Microsoft has a right to recoup its investment by charging vendors for access.  Furthermore, Microsoft has been flexible in its license negotiations with third parties and settled with its last big competitor in the EC antitrust case in July 2006.  This case is not about protecting consumers or preserving competition; it is an assault on American innovation by European technocrats.” 

An analysis by PricewaterhouseCoopers found that Microsoft’s proposed prices for protocol information are at least 30 percent below the market rate for comparable technology.

“Overbearing regulations have all but extinguished technological innovation in Europe.  The continuing persecution of Microsoft is an attempt to export its pricing regulations to the rest of the world, which will hurt taxpayers and consumers everywhere,” Schatz concluded. 

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.