SPA Urges EC to Reject Microsoft Antitrust Exemption

The Software Publishers Association (SPA) filed comments with the European Commission (EC) today opposing a request by Microsoft Corp. for exemption from European antitrust laws -- a move that reflects another dispute between the software giant and some members of the trade group. At issue are 24 cross-promotional contracts Microsoft has with European ISPs (Internet service providers). Under original terms of the contracts, Microsoft agreed to promote the ISPs if the service providers would promote the software maker's Internet Explorer Web browser.

The Software Publishers Association (SPA) filed comments with the European Commission (EC) today opposing a request by Microsoft Corp. for exemption from European antitrust laws -- a move that reflects another dispute between the software giant and some members of the trade group.

At issue are 24 cross-promotional contracts Microsoft has with European ISPs (Internet service providers). Under original terms of the contracts, Microsoft agreed to promote the ISPs if the service providers would promote the software maker's Internet Explorer Web browser.

Those terms would allow Microsoft to use its dominance in the operating system market to control the sale of products and services in other markets, and also would strip consumers of choices, the SPA contends in its letter to the EC.

However, contractual terms were changed in February at the request of the EC and because of market pressure. The contracts now allow the ISPs more flexibility in promoting software from Microsoft's competitors.

The EC has not yet reached a decision as to whether Microsoft must alter its contracts with ISPs, but a source close to the Commission said that based on comments that it had received by the end of last week, it was unlikely to rule against Microsoft.

The SPA comments were submitted after the EC deadline, because the matter had to be considered by three separate SPA committees -- a standard procedure at the SPA, according to Ken Wasch, association president, of the SPA , which has some 1,200 members worldwide, including Microsoft.

The SPA board -- the governing body of the association -- voted 9 to 4 with one abstention by secret ballot on Monday to file the comments. Asked if he thought the agreement modifications made by Microsoft would have any bearing on SPA's case to the EC, Wasch said that top Microsoft executives participated in the committee discussions and didn't mention the changed contracts.

"If the issue is moot, Microsoft did not raise that in connection with the discussion before our three boards," he said.

The matter of whether or not the trade group should comment on antitrust issues "is tearing SPA apart, no question," Wasch said.

A minority of group members consistently oppose such actions, he said. The SPA also is accused by Microsoft of bashing the company.

"We're not bashing them," Wasch said. "We just don't think they should be given an exemption from European laws." The exemption would strip consumers of choices, he said.

The association "three times voted overwhelmingly to proceed in support of the principle that the dominating operating system should be prohibited from leveraging that operating system into the sale of other products and services," Wasch said.

But according to Microsoft spokesman Mark Murray, that isn't at all the way things transpired. The first SPA vote came from the group's government affairs committee and was 7 to 6 not to file comments with the EC, Murray said.

According to association information that Murray showed the IDG News Service via e-mail, the committee voted favorably on the question, "SPA should decline to comment on the European Commission notice regarding Microsoft's agreements with the Internet service providers."

Because there was agreement on that issue, the matter was not to proceed, Murray said. When the vote didn't turn out the way Microsoft competitors and some board members wanted, the SPA then put the issue to its European board, which deadlocked 6 to 6, he said.

So, the matter went to the overall board where by both accounts a heated debate ensued.

"This is a sad day for the SPA and the software industry as a whole," Murray said today, adding that the action lacks credibility and substance.

Members of the association had to know that Microsoft already altered the contracts, he contended.

"Microsoft made voluntary modifications to cross promotional agreements in February and those (modifications) were extensively covered in virtually every major media in the country. They were a subject of a (U.S.) Congressional hearing and I would say dozens of newspaper articles, so allegations that the SPA was unaware of the modifications that Microsoft made voluntarily is very surprising and troubling."

Moreover, Murray said he believes that the modifications were mentioned during the course of the SPA discussions.

"The only reason the SPA is taking this action is because a handful of Microsoft competitors think the short-term benefit to themselves of attacking Microsoft is worth the long-term damage to the SPA's integrity and credibility."

The SPA, based in Washington, D.C., can be reached at +1-202-452-1600 or at http://www.spa.org/. Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com/.

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