Microsoft Is Yielding in European Antitrust Fight

Microsoft has given up its nine-year fight against antitrust regulators in Europe, saying yesterday that it would not challenge a court judgment from last month and would share technical information with rivals on terms the software giant had long resisted.

European regulators and some software groups in Europe hailed the deal as a breakthrough that should open the door to freer competition, especially in the market for the server software that powers corporate data centers and the Internet.

The agreement was struck in Europe, but it will have consequences worldwide because the terms for licensing Microsoft’s intellectual property will be extended to competitors in the United States and in other markets. If the new terms enhance competition, as the regulators say, consumers could benefit from lower prices and faster innovation in software.

The Microsoft deal leaves untouched the ruling last month by Europe’s second-highest court that provides a strong legal foundation for the European Union’s power to force a dominant company to share its intellectual property with rivals.

But just how much effect the agreement will have on the global software marketplace remains uncertain because many issues in the case already have been addressed, either by engineering or by previous legal settlements, according to some industry analysts.

As part of its past efforts to settle its antitrust problems, Microsoft has reached costly agreements with competitors that were the company’s most outspoken critics, including Sun Microsystems, I.B.M. and Novell.

In general, analysts said, the private settlements between Microsoft and competitors provided for cross-licensing and sharing technology.

What is clear is how much Microsoft’s room for legal maneuvering was limited by the ruling last month by the Court of First Instance in Luxembourg. The court reaffirmed that Microsoft, the world’s largest software maker, had abused its market power and said the company must obey a 2004 European Commission order to share confidential computer code with competitors.

After the courtroom setback, Steven A. Ballmer, Microsoft’s chief executive, wrote a conciliatory letter to Neelie Kroes, the European competition commissioner, according to a commission staff official. During the first week of October, Mr. Ballmer was on a scheduled trip to Europe and made an impromptu visit to the Netherlands, where Ms. Kroes lives. Over a long dinner, they met and agreed on the broad terms of the deal. To reach the final terms, Mr. Ballmer and Ms. Kroes spoke daily after the dinner meeting, according to a Microsoft executive.

The upper hand in these talks, legal experts say, certainly belonged to Ms. Kroes. “She was really negotiating from a position of strength, which she did not have before the ruling by the Court of First Instance,” said Andrew I. Gavil, a law professor at Howard University.

Ms. Kroes cast the agreement as a victory for Microsoft’s rivals, especially companies that rely on open-source software like the Linux operating system, an increasingly popular alternative to Microsoft’s products on servers.

To thrive in the marketplace, open-source software must work well with Microsoft’s desktop programs, notably the Windows personal computer operating systems. More than 90 percent of PCs run on Windows. Microsoft software also powers about 70 percent of the market for servers, so access to that technology will be crucial for competitors.

The European order mandates that Microsoft share its technology information on fair terms, so competing software can work smoothly, or interoperate, with Windows software. It is those terms to ease interoperability that will become more favorable to Microsoft competitors.

“These changes in Microsoft’s business practices, in particular towards open-source developers, will profoundly affect the software industry,” Ms. Kroes said in a statement. “The repercussions of these changes will start now and will continue for years to come.”

Under the agreement, Microsoft said it would not pursue a final appeal to the European Court of Justice, which could have drawn the case out two to three years more. Microsoft said it would make the server protocols available for purchase through its Web site, at www.microsoft.com/protocols.

Under the agreement, software developers must now pay only a one-time fee of 10,000 euros, or $14,300, to gain access to Microsoft’s communications protocols, which specify how to exchange data between Windows and rival products. These protocols are trade secrets, not patents. If competitors want more information than those trade secrets, they must license Microsoft’s patents, paying a royalty of 0.4 percent of the competing product’s sales. Microsoft had originally demanded 5.95 percent of sales as royalties.

“This is a huge breakthrough,” said Georg Greve, president of the Free Software Foundation Europe, which had challenged Microsoft’s practice of withholding technical information. “Microsoft is finally doing what the commission ordered it to do. This will level the playing field.”

LİNK:http://www.nytimes.com/2007/10/23/technology/23soft.html?ref=worldbusiness

$100,000? Too High. $120 Million? Fine.

The efforts of federal regulators to curtail cronyism on corporate boards have led to some odd outcomes. The case of Michael K. Powell, a new director of Cisco Systems, is a prime example.

Mr. Powell, the former chairman of the Federal Communications Commission, happens to be a son of Colin Powell, the former secretary of state. Cisco happens to have paid the senior Mr. Powell more than $100,000 to deliver two speeches in 2005.

Under guidelines established by the Nasdaq stock market, that connection disqualifies the younger Mr. Powell as an independent director, so he cannot sit on the company’s audit, compensation or governance committees. But by the same definition, Richard M. Kovacevich, the chairman of Wells Fargo, is an independent director of Cisco, even though his company has promised to lend Cisco $120 million.

The difference is that Cisco’s line of credit is deemed too small a part of Wells Fargo’s overall business to present a conflict of interest, while the payments to the senior Mr. Powell exceeded the allowable annual limit of $100,000 to any family member of an independent director. PATRICK McGEEHAN

PLAYING DEFENSE? The former National Football League player Dwight Sean Jones may have met his toughest opponent yet: federal securities regulators. The Securities and Exchange Commission ordered Mr. Jones, a former Los Angeles Raiders defensive end, to answer complaints that his investment firm, Amaroq Asset Management, has flouted federal securities law.

The commission’s order said Mr. Jones, who went on to become a players’ agent after winding up his pro career in 1996, had refused to produce or permit the inspection of business records at Amaroq, a registered investment adviser. Such examination is required by the Investment Advisers Act.

According to the S.E.C., Mr. Jones told the commission in 2003 that he was managing more than $44 million in assets for his clients, mostly athletes. He said at different times that company records had been destroyed in a fire, that they were on a moving truck and that they had inadvertently been sold by a storage company.

Securities regulators also said that although Mr. Jones contended that Amaroq discontinued business in 2004, he had never notified the commission.

The S.E.C. said Mr. Jones does not have a lawyer representing him. Mr. Jones, 44, did not reply to phone messages asking for comment. ELIZABETH OLSON

BRIDGING THE PAY GAP The average chief executive of a large corporation makes 400 times the pay of his company’s average worker, and that gap has quadrupled in less than two decades, says Senator Carl Levin, Democrat of Michigan. He wants to close the difference by ending a corporate tax break for executive stock options.

“The single biggest factor responsible for this massive pay gap is stock options,” said Mr. Levin, who introduced legislation on Friday to require the federal corporate tax deduction for stock option compensation to match the expense shown on corporate financial reports filed with the S.E.C.

Now, companies can show one stock option expense on their books and another on their tax returns, said Mr. Levin, whose legislation is supported by several consumer and labor groups.

The mismatch permitted companies in 2004 to claim $43 billion more in stock-option tax deductions than the expenses shown on their books, he said. That “shortchanges the Treasury,” said Mr. Levin, and “provides a windfall to companies doling out huge stock options.” ELIZABETH OLSON

RED AND GREEN IN AFRICA Red, a marketing program started last year by Bono, the singer, and Bobby Shriver, son of the first director of the Peace Corps, Sargent Shriver, evidently is doing more than raising money to fight AIDS in Africa through sales of Motorola, Gap, Converse, Emporio Armani and other products.

Speaking last week at an Advertising Club luncheon in New York honoring Mr. Shriver’s efforts, Ngozi Okonjo-Iweala, a Brookings Institute fellow and a former finance minister of Nigeria, praised Red for employing Africans, who make cloth for Converse sneakers and packaging for Motorola cellphones. “You’re creating so many jobs, and when you do that, they have money in their pockets, they can buy the antiretrovirals, they can send their children to school, they can feed themselves,” she said.

Ms. Okonjo-Iweala said Mr. Shriver was “not someone who just discovered Africa,” but “someone who started discovering it a long time ago.” In his youth, Mr. Shriver often visited Africa with his family.

Russell Simmons, the hip-hop impresario, said Red had inspired his jewelry company’s Green Initiative collection, which donates a percentage of profits to a fund for education programs in diamond-producing African nations. JANE L. LEVERE

LİNK:http://www.nytimes.com/2007/09/30/business/30suits.html?_r=1&oref=slogin