(Washington, D.C.) – Citizens Against Government Waste (CAGW) today urged the European Commission to decide against imposing a $5 million-a-day fine on Microsoft Corporation.  Last night, Microsoft submitted its proposal for complying with punitive measures imposed in March 2004.  The Commission, the European Union’s antitrust regulator, will hear testimony from Microsoft’s competitors and will decide before the end of July whether the company has adequately complied with expensive anti-trust penalties.

“Having Microsoft’s competitors play judge and jury makes the EC’s harassment of Microsoft even more ridiculous and damaging,” CAGW President Tom Schatz said.  “Given the opportunity to achieve in litigation what they cannot achieve in the marketplace, competitors will hardly be objective in these proceedings.  This is why governments should not be in the business of designing software.”

In March 2004, the European Court of First Instance—in spite of acknowledging the merits of Microsoft’s antitrust defense—ruled against the corporation and forced Microsoft to comply with the EC’s demands to create two versions of the Windows operating systems, one with Media Player, and one without.  In addition, Microsoft was forced to release system server code, which is valuable intellectual property, to competitors to facilitate interoperable applications.  The EC also ordered Microsoft to pay a $666 million fine.

Competitors and third-party software developers have recently complained that the unbundled version of Windows has technical problems that make it less functional when used with other players – and these same competitors will now advise the EC.  Microsoft, CAGW, other industry observers, and even the EC agreed that the non-Media Player version would cause some applications to fail.

“The crux of this dispute is the licensing of Microsoft’s intellectual property and the penchant for the EC to favor open source developers, who do not charge for free software,” CAGW President Tom Schatz continued.  “These developers claim that they cannot monitor all end users of their software and therefore cannot pay for each use of Microsoft’s intellectual property.  But such payments are the only protection Microsoft has left for such a valuable asset.”

If Microsoft’s competitors successfully convince the EC that the company is not in compliance, officials can impose a fine of up to 5 percent of Microsoft’s daily global sales as long as it breaches the antitrust ruling.

“Forcing Microsoft to give away its source code is piracy by litigation,” Schatz concluded.  “Competitors will continue to tie up the courts and waste tax dollars by suing successful companies.  The EC’s continued action stymies innovation and undercuts intellectual property rules.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.