New Microsoft security plan shouldn't shut out competitors, European antitrust official says

[InfoSec News <isn () c4i org>]

http://www.siliconvalley.com/mld/siliconvalley/3582259.htm

July 01, 2002

WASHINGTON (AP) - Microsoft should be careful that its new software 
security plan doesn't shut out competitors, the European Union's new 
antitrust enforcer said Monday.

The European Union will ``ensure that competitors have the capacity to 
offer the range of services they want to provide, including 
security,'' Philip Lowe said. Lowe starts work as the EU's Director 
General for Competition on Sept. 1.

``We have always emphasized that there should be an emphasis on 
interoperability,'' Lowe said.

European officials have their own antitrust investigation pending 
against Microsoft, which is separate from the U.S. case.

The European case has focused more on whether Microsoft has illegally 
changed commonly used industry standards in order to shut out 
competitors.

Microsoft's new security product, called Palladium, would use 
Microsoft's Windows operating system and custom computer chips to 
encrypt data, like documents or music files, so that only the intended 
recipient could use them.

That has raised questions among technologists and consumer advocates, 
who wonder whether a file encrypted using Palladium would be 
accessible on computers running Apple's Macintosh operating systems or 
the free Linux operating system.

A Microsoft official, speaking on condition of anonymity, cautioned 
that work on Palladium is still in its infancy but said it wouldn't 
prefer Microsoft's operating system over competing software.

Hardware specifications for the Palladium chip would be fully 
disclosed so other software makers could use it, the official said.

But that use may not come for free. Another Microsoft official warned 
that competitors may have to pay license fees.

Lowe's remarks were made after a speech to the American Antitrust 
Institute in Washington.

Microsoft's competitors have told European officials that Microsoft 
has used its desktop monopoly in order to horn in on the market for 
servers, which link personal computers on networks like the Internet.

Microsoft has offered some concessions -- such as disclosing more 
technical data to consumers -- that go beyond its proposed settlement 
with the U.S. Justice Department.

However, the British-born Lowe said the European Union won't finish 
its analysis of the case until the end of the year -- after U.S. 
courts decide whether to approve the Justice Department settlement or 
impose harsher antitrust sanctions sought by nine states.

``Until Microsoft has more clarity on the U.S. side, we're not in a 
position'' to take action, Lowe said. ``We will be in close 
consultation with the U.S. on the issues it has addressed and is 
addressing.''

Decisions in both the federal settlement and the states' case are 
expected in late summer.

Unlike the U.S. lawsuits, which involve changes in the way Microsoft 
does business, penalties in the European action could include fines of 
up to 10 percent of Microsoft's annual revenue. In Microsoft's case, 
that could add up to over $2 billion.



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