Adobe, Microsoft Could Be Headed to Court Over PDF Support

Reports say Microsoft expects Adobe to file suit, most likely in Europe, where regulators have taken a particularly hard-line stance against Microsoft of late, after talks between the two companies broke down in recent weeks.

Ready for Action

At issue is apparently the ability of Office 2007 users to save a variety of Office document formats -- such as those in Word, Excel or PowerPoint format -- as PDF files. Adobe may feel such a feature poses a threat to its Acrobat software, a paid version of which enables users to do the same thing.

The Wall Street Journal reported Friday that Microsoft expects legal action in coming weeks and that Microsoft had agreed to separate the PDF technology from the rest of the Office suite, but would not agree to charge users for the right to use it.

Brad Smith, Microsoft's chief lawyer, told The Journal that talks went on some four months before breaking down earlier this week.

Adobe's Acrobat is widely used to view PDF files and its enhanced versions enable other file formats to be converted into PDFs. Microsoft has been under pressure to enable documents created in its proprietary applications to be readable by others who do not have the same software. In fact, that compatibility argument led to a push by the state of Massachusetts to require all agencies to adopt non-Microsoft document software by next year.

Microsoft has responded by building PDF creation ability into Office 2007 and by developing its own technology, known in development as Metro, for sharing documents widely.

No PDF?

Microsoft would need Adobe's cooperation to include PDF-creation capabilities in Office 2007 and a dispute could either delay the launch of the suite beyond the current scheduled date of early 2007 or force Microsoft to launch the product without the feature.

If it comes to legal action, Microsoft would be facing off against a longtime partner in Adobe. The software giant finds itself running increasingly into these types of clashes as it moves to build more features into its next-generation products.

For instance, Microsoft has long worked alongside Symantec (Nasdaq: SYMC) for years but now is seen denting that company's business by building security features into Windows Vista.

Things may have started to get more tense between Microsoft and Adobe following Adobe's purchase of Macromedia (Nasdaq: MACR) last year, JupiterResearch analyst David Schatsky said. That purchase gave Adobe access to Macromedia's widely used Flash Web animation technology and its success at propagating its products as a document-management solution for large enterprises, Schatsky added.

Ironically, one of the reasons for the widespread success of PDF has been Adobe's willingness to share the technology as a way of solidifying it as the standard for sharing documents among different platforms. For example, PDF has served as a major bridge between Apple (Nasdaq: AAPL) and PC users over time.

More Court Time?

Microsoft continues to face significant antitrust scrutiny in both the U.S., where regulators recently reported on the company's compliance with its earlier settlement, and in Europe, where Microsoft continues to battle in court for the right to get out from under penalties and sanctions put in place after it was found to have abused its market power.

The company has worked hard to reduce its exposure to private suits, reaching extensive and often costly settlements with the likes of AOL, Sun Microsystems (Nasdaq: JAVA) and IBM (NYSE: IBM) .

Meanwhile, Microsoft has also sought to make itself more partner-friendly, saying it was eager to work with third-party software developers to encourage them to build Windows-compatible applications and even agreeing to share its Windows code in some circumstances.

"There is always going to be a tension for Microsoft between getting users to stay within the Windows world and having them use other products," Enderle Group Principal Analyst Rob Enderle told the E-Commerce Times. "They're still figuring out the boundaries of those types of relationships."