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The (European Union's) European Commission today imposed a penalty payment of  $1.3 billion (€899 million) on Microsoft for non-compliance with its obligations under the Commission's March 2004 decision prior to October 22, 2007.

Today's decision, adopted under Article 24(2) of Regulation 1/2003, finds that, prior to 22 October 2007, Microsoft had charged unreasonable prices for access to interface documentation for work group servers. The 2004 decision, which was upheld by the Court of First Instance in September 2007, found that Microsoft had abused its dominant position under Article 82 of the EC Treaty and required Microsoft to disclose interface documentation, which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers at a reasonable price. (The Commission imposed a fine at that time of €497,196,304, or $740 million at today's conversion rates.)

"Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said European Competition Commissioner Neelie Kroes. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft's future conduct."

The Commission's decision of March 2004 requires Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems on reasonable terms.

Initially, Microsoft had demanded a royalty rate of 3.87 percent of a licensee's product revenues for a patent license (the "patent license") and of 2.98 percent for a license giving access to the secret interoperability information (the "information license"). In a statement of objections of 1 March 2007, the Commission set out its concerns regarding Microsoft's unreasonable pricing. On May 21, 2007, Microsoft reduced its royalty rates to 0.7 percent for a patent license and 0.5 percent for an information license, as regards sales within the EEA, while leaving the worldwide rates unchanged.

Only as from October 22, 2007 did Microsoft provide a license giving access to the interoperability information for a flat fee of $14,888 (€10 000) and an optional worldwide patent license for a reduced royalty of 0.4 percent of licensees' product revenues.

Today's decision concludes that the royalties that Microsoft charged for the information license-i.e. access to the interoperability information-prior to October 22, 2007 were unreasonable. Microsoft therefore failed to comply with the March 2004 decision for three years, thereby continuing the behavior confirmed as illegal by the Court of First Instance. Today's decision concerns a period of non-compliance not covered by the penalty payment decision of 12 July 2006 starting on June 21, 2006 and ending on October 21, 2007. The decision does not cover the royalties for a distinct patent license.

The Commission has based its conclusions as to the unreasonableness of Microsoft's royalties prior to October 22, 2007 on the lack of innovation in a very large proportion of the unpatented interoperability information and a comparison with the pricing of similar interoperability technology.

For further information and background on this case see MEMO/08/125 and the Europa Web site: http://ec.europa.eu/comm/competition/antitrust/cases/microsoft/index.html.

 

Following is a list of frequently asked questions provided by the European Commission.

 

Q. Why has the Commission taken this decision after Microsoft has complied with the 2004 decision in October 2007?

A. Microsoft failed to comply with its obligation under the 2004 decision for nearly three years after its application for interim measures was rejected by the president of the Court of First Instance on December 22, 2004. During this period Microsoft was able to continue to reap the benefits of its illegal refusal to disclose interoperability information to the detriment of innovation and consumers.

Q. Is Microsoft now in full compliance with the 2004 decision?

A. In line with the 2004 decision, since October 22, 2007 Microsoft provides the interoperability information on reasonable and non-discriminatory terms. Microsoft recently posted the interoperability information on its Web site. The interoperability information made available by Microsoft also appears to be complete and accurate to an extent that a software development project can be based on it. Therefore, on the basis of the information currently at its disposal, the Commission considers that Microsoft is now, more than three years later, complying with its obligations under the 2004 decision. However, licensees may raise additional issues when they obtain access to the information and Microsoft must keep the interoperability information updated and fix errors on an ongoing basis.

Q. Why did the Commission consider Microsoft's royalty rates prior to 22 October 2007 unreasonable?

A. The Commission examined the interoperability information provided by Microsoft with the help of technical experts (and in particular the Monitoring Trustee, Mr. Barret, a UK computer specialist chosen by the Commission from a short list proposed by Microsoft). The Commission concluded that a very large part of the unpatented interoperability information lacked innovation. Furthermore, a comparison with the pricing of similar interoperability technology, including other technology made available by Microsoft itself, shows that royalties demanded by Microsoft for this kind of unpatented information prior to 22 October were unreasonable.

Q. Why is the imposed penalty payment higher than the fine imposed on Microsoft in the 2004 decision?

A. Fines and penalty payments are different in character. While fines sanction past infringements, penalty payments are intended to induce a speedy end to non-compliance with a previous Commission decision. A maximum daily amount is fixed in advance in order to create a sufficient deterrent from further non-compliance and the total potential liability is based on the application of this daily amount to the subsequent period of non-compliance.

The maximum amount for fines under Regulation 1/2003 is 10 percent of the yearly turnover of the concerned undertaking whilst the maximum amount for daily penalty payments is 5 percent of the average daily turnover per day.

Q. Why is the interoperability information so important?

A. As recently confirmed by the Court of First Instance in its Microsoft judgment the interoperability information, i.e. the interface information of how to "communicate" with Microsoft's PC and server operating systems that Microsoft refused to disclose to its competitors, is vital for them to viably compete in the market for work group server operating systems and to be able to bring innovative products to that market.

Q. Where does the money go?

A. The penalty payment is paid into the EU budget. It does not increase the budget, but reduces the contribution from member states and so from taxpayers.

The European Commission represents the general interest of the EU and is the driving force in proposing legislation (to Parliament and the Council), administering and implementing EU policies, enforcing EU law (jointly with the Court of Justice) and negotiating in the international arena.

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The (European Union's) European Commission today imposed a penalty payment of  $1.3 billion (€899 million) on Microsoft for non-compliance with its obligations under the Commission's March 2004 decision prior to October 22, 2007.

Today's decision, adopted under Article 24(2) of Regulation 1/2003, finds that, prior to 22 October 2007, Microsoft had charged unreasonable prices for access to interface documentation for work group servers. The 2004 decision, which was upheld by the Court of First Instance in September 2007, found that Microsoft had abused its dominant position under Article 82 of the EC Treaty and required Microsoft to disclose interface documentation, which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers at a reasonable price. (The Commission imposed a fine at that time of €497,196,304, or $740 million at today's conversion rates.)

"Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said European Competition Commissioner Neelie Kroes. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft's future conduct."

The Commission's decision of March 2004 requires Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems on reasonable terms.

Initially, Microsoft had demanded a royalty rate of 3.87 percent of a licensee's product revenues for a patent license (the "patent license") and of 2.98 percent for a license giving access to the secret interoperability information (the "information license"). In a statement of objections of 1 March 2007, the Commission set out its concerns regarding Microsoft's unreasonable pricing. On May 21, 2007, Microsoft reduced its royalty rates to 0.7 percent for a patent license and 0.5 percent for an information license, as regards sales within the EEA, while leaving the worldwide rates unchanged.

Only as from October 22, 2007 did Microsoft provide a license giving access to the interoperability information for a flat fee of $14,888 (€10 000) and an optional worldwide patent license for a reduced royalty of 0.4 percent of licensees' product revenues.

Today's decision concludes that the royalties that Microsoft charged for the information license-i.e. access to the interoperability information-prior to October 22, 2007 were unreasonable. Microsoft therefore failed to comply with the March 2004 decision for three years, thereby continuing the behavior confirmed as illegal by the Court of First Instance. Today's decision concerns a period of non-compliance not covered by the penalty payment decision of 12 July 2006 starting on June 21, 2006 and ending on October 21, 2007. The decision does not cover the royalties for a distinct patent license.

The Commission has based its conclusions as to the unreasonableness of Microsoft's royalties prior to October 22, 2007 on the lack of innovation in a very large proportion of the unpatented interoperability information and a comparison with the pricing of similar interoperability technology.

For further information and background on this case see MEMO/08/125 and the Europa Web site: http://ec.europa.eu/comm/competition/antitrust/cases/microsoft/index.html.

 

Following is a list of frequently asked questions provided by the European Commission.

 

Q. Why has the Commission taken this decision after Microsoft has complied with the 2004 decision in October 2007?

A. Microsoft failed to comply with its obligation under the 2004 decision for nearly three years after its application for interim measures was rejected by the president of the Court of First Instance on December 22, 2004. During this period Microsoft was able to continue to reap the benefits of its illegal refusal to disclose interoperability information to the detriment of innovation and consumers.

Q. Is Microsoft now in full compliance with the 2004 decision?

A. In line with the 2004 decision, since October 22, 2007 Microsoft provides the interoperability information on reasonable and non-discriminatory terms. Microsoft recently posted the interoperability information on its Web site. The interoperability information made available by Microsoft also appears to be complete and accurate to an extent that a software development project can be based on it. Therefore, on the basis of the information currently at its disposal, the Commission considers that Microsoft is now, more than three years later, complying with its obligations under the 2004 decision. However, licensees may raise additional issues when they obtain access to the information and Microsoft must keep the interoperability information updated and fix errors on an ongoing basis.

Q. Why did the Commission consider Microsoft's royalty rates prior to 22 October 2007 unreasonable?

A. The Commission examined the interoperability information provided by Microsoft with the help of technical experts (and in particular the Monitoring Trustee, Mr. Barret, a UK computer specialist chosen by the Commission from a short list proposed by Microsoft). The Commission concluded that a very large part of the unpatented interoperability information lacked innovation. Furthermore, a comparison with the pricing of similar interoperability technology, including other technology made available by Microsoft itself, shows that royalties demanded by Microsoft for this kind of unpatented information prior to 22 October were unreasonable.

Q. Why is the imposed penalty payment higher than the fine imposed on Microsoft in the 2004 decision?

A. Fines and penalty payments are different in character. While fines sanction past infringements, penalty payments are intended to induce a speedy end to non-compliance with a previous Commission decision. A maximum daily amount is fixed in advance in order to create a sufficient deterrent from further non-compliance and the total potential liability is based on the application of this daily amount to the subsequent period of non-compliance.

The maximum amount for fines under Regulation 1/2003 is 10 percent of the yearly turnover of the concerned undertaking whilst the maximum amount for daily penalty payments is 5 percent of the average daily turnover per day.

Q. Why is the interoperability information so important?

A. As recently confirmed by the Court of First Instance in its Microsoft judgment the interoperability information, i.e. the interface information of how to "communicate" with Microsoft's PC and server operating systems that Microsoft refused to disclose to its competitors, is vital for them to viably compete in the market for work group server operating systems and to be able to bring innovative products to that market.

Q. Where does the money go?

A. The penalty payment is paid into the EU budget. It does not increase the budget, but reduces the contribution from member states and so from taxpayers.

The European Commission represents the general interest of the EU and is the driving force in proposing legislation (to Parliament and the Council), administering and implementing EU policies, enforcing EU law (jointly with the Court of Justice) and negotiating in the international arena.

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    Your system didn’t become unsecure overnight and you won’t be able to turn it around overnight either. But quick wins are possible with IBM i security, and Robin Tatam will show you how to achieve them.

  • How to Meet the Newest Encryption Requirements on IBM i

    SB PowerTech WC GenericA growing number of compliance mandates require sensitive data to be encrypted. But what kind of encryption solution will satisfy an auditor and how can you implement encryption on IBM i? Watch this on-demand webinar to find out how to meet today’s most common encryption requirements on IBM i. You’ll also learn:

    • Why disk encryption isn’t enough
    • What sets strong encryption apart from other solutions
    • Important considerations before implementing encryption

     

     

  • Security Bulletin: Malware Infection Discovered on IBM i Server!

    SB PowerTech WC GenericMalicious programs can bring entire businesses to their knees—and IBM i shops are not immune. It’s critical to grasp the true impact malware can have on IBM i and the network that connects to it. Attend this webinar to gain a thorough understanding of the relationships between:

    • Viruses, native objects, and the integrated file system (IFS)
    • Power Systems and Windows-based viruses and malware
    • PC-based anti-virus scanning versus native IBM i scanning

    There are a number of ways you can minimize your exposure to viruses. IBM i security expert Sandi Moore explains the facts, including how to ensure you're fully protected and compliant with regulations such as PCI.

     

     

  • Fight Cyber Threats with IBM i Encryption

    SB PowerTech WC GenericCyber attacks often target mission-critical servers, and those attack strategies are constantly changing. To stay on top of these threats, your cybersecurity strategies must evolve, too. In this session, IBM i security expert Robin Tatam provides a quick recap of IBM i security basics and guides you through some advanced cybersecurity techniques that can help you take data protection to the next level. Robin will cover:

    • Reducing the risk posed by special authorities
    • Establishing object-level security
    • Overseeing user actions and data access

     

     

     

  • 10 Practical IBM i Security Tips for Surviving Covid-19 and Working From Home

    SB PowerTech WC GenericNow that many organizations have moved to a work from home model, security concerns have risen.

    During this session Carol Woodbury will discuss the issues that the world is currently seeing such as increased malware attacks and then provide practical actions you can take to both monitor and protect your IBM i during this challenging time.

     

  • How to Transfer IBM i Data to Microsoft Excel

    SB_HelpSystems_WC_Generic3 easy ways to get IBM i data into Excel every time
    There’s an easy, more reliable way to import your IBM i data to Excel? It’s called Sequel. During this webinar, our data access experts demonstrate how you can simplify the process of getting data from multiple sources—including Db2 for i—into Excel. Watch to learn how to:

    • Download your IBM i data to Excel in a single step
    • Deliver data to business users in Excel via email or a scheduled job
    • Access IBM i data directly using the Excel add-in in Sequel

    Make 2020 the year you finally see your data clearly, quickly, and securely. Start by giving business users the ability to access crucial business data from IBM i the way they want it—in Microsoft Excel.

     

     

  • HA Alternatives: MIMIX Is Not Your Only Option on IBM i

    SB_HelpSystems_WC_GenericIn this recorded webinar, our experts introduce you to the new HA transition technology available with our Robot HA software. You’ll learn how to:

    • Transition your rules from MIMIX (if you’re happy with them)
    • Simplify your day-to-day activities around high availability
    • Gain back time in your work week
    • Make your CEO happy about reducing IT costs

    Don’t stick with a legacy high availability solution that makes you uncomfortable when transitioning to something better can be simple, safe, and cost-effective.

     

     

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  • Backup and Recovery on IBM i: Your Strategy for the Unexpected

    SB HelpSystems SC 5413Robot automates the routine tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:
    - Simplified backup procedures
    - Easy data encryption
    - Save media management
    - Guided restoration
    - Seamless product integration
    Make sure your data survives when catastrophe hits. Try the Robot Backup and Recovery Solution FREE for 30 days.

  • Manage IBM i Messages by Exception with Robot

    SB HelpSystems SC 5413Managing messages on your IBM i can be more than a full-time job if you have to do it manually. How can you be sure you won’t miss important system events?
    Automate your message center with the Robot Message Management Solution. Key features include:
    - Automated message management
    - Tailored notifications and automatic escalation
    - System-wide control of your IBM i partitions
    - Two-way system notifications from your mobile device
    - Seamless product integration
    Try the Robot Message Management Solution FREE for 30 days.

  • Easiest Way to Save Money? Stop Printing IBM i Reports

    SB HelpSystems SC 5413Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing.
    Manage your reports with the Robot Report Management Solution. Key features include:

    - Automated report distribution
    - View online without delay
    - Browser interface to make notes
    - Custom retention capabilities
    - Seamless product integration
    Rerun another report? Never again. Try the Robot Report Management Solution FREE for 30 days.

  • Hassle-Free IBM i Operations around the Clock

    SB HelpSystems SC 5413For over 30 years, Robot has been a leader in systems management for IBM i.
    Manage your job schedule with the Robot Job Scheduling Solution. Key features include:
    - Automated batch, interactive, and cross-platform scheduling
    - Event-driven dependency processing
    - Centralized monitoring and reporting
    - Audit log and ready-to-use reports
    - Seamless product integration
    Scale your software, not your staff. Try the Robot Job Scheduling Solution FREE for 30 days.

  • ACO MONITOR Manages your IBM i 24/7 and Notifies You When Your IBM i Needs Assistance!

    SB DDL Systems 5429More than a paging system - ACO MONITOR is a complete systems management solution for your Power Systems running IBM i. ACO MONITOR manages your Power System 24/7, uses advanced technology (like two-way messaging) to notify on-duty support personnel, and responds to complex problems before they reach critical status.

    ACO MONITOR is proven technology and is capable of processing thousands of mission-critical events daily. The software is pre-configured, easy to install, scalable, and greatly improves data center efficiency.