Bowing to regulators, Microsoft opens up

February 21, 2008: 1:26 PM ET

Microsoft (MSFT) on Thursday announced that it will openly share details about how its most popular software works, a stance the company fought for years until European regulators forced its hand in September.

It's not clear how Microsoft's new policy will impact the technology landscape. But it seemed inevitable that the company would head in this direction after Microsoft lost a battle with European regulators over whether it was unfairly using its market dominance to make inroads into corporate networking software.

Under its new policy, Microsoft will set up a website showing software developers how to write programs that freely communicate with systems based on Windows Vista, Windows Server 2008, SQL Server 2008, Office 2007, Exchange Server 2007, Office SharePoint Server 2007, and future versions of the programs. In the past, competitors have complained that because Microsoft's Windows operating systems dominate the corporate market, it has been able to use its inside knowledge to gain unfair advantage in the market for servers.

Microsoft had jealously guarded the secrets it is now freely distributing. The company had argued that its application program interfaces, or APIs, were painstakingly developed and that it should not be forced to share them with competitors. Even with its new openness, Microsoft believes its secrets have value; while the public is free to view the code and use it on personal projects, those who incorporate it into a commercial product or use it for business purposes will have to pay a "low royalty rate" to Microsoft.

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