Sunday, 18 January 2009 17:51

EU signals further antitrust action against Microsoft

Not content with the massive €899 million fine levied on Microsoft last year, the European Commission is considering further action against the software giant. This time, Internet Explorer is at the heart of the issue.

For over a decade, Microsoft has bundled Internet Explorer with various versions of the Windows operating system. This has generally been seen as detrimental to competition in browsers.

Prior to the arrival of Internet Explorer, Netscape was the dominant browser, but that quickly changed. More recently, the open source Firefox browser and to a lesser extent Apple's Safari have eaten into Internet Explorer's market share, but Microsoft's browser still takes the lion's share.

This is largely because it ships as a standard part of the software bundle on some 90 percent of PCs sold around the world.

In a memo released over the weekend, the European Commission confirmed that it has sent a statement of objections to Microsoft, asserting that the Commission has taken a preliminary view that the tying of Internet Explorer with Windows is an abuse of its dominant position.

A similar position was taken by the EC regarding the tying of Windows Media Player with Windows, and in March 2004 the commission required Microsoft to offer a version of Windows without Windows Media Player.

Some competitors and observers did not think that was a satisfactory outcome, as Microsoft was free to sell the WMP-free version of Windows at the same price as the regular versions.

What might happen this time? Please read on.

What they are likely hoping for this time is that Microsoft will be required to stop shipping Internet Explorer with Windows. Even if the company continues to supply the browser free of charge, users would then be able to choose which they should use, without being presented with a default choice.

As the EC notes, the problem isn't just that the bundling of a browser with Windows disadvantages companies who develop web browsers (such as Norway-based Opera Software) - it also increases the likelihood that people and organisations will tend to develop web sites and software that are compatible with Internet Explorer but not necessarily other browsers.

It seems that the EC's renewed interest in Microsoft was triggered by a complaint made by Opera

This risks reduced competition and innovation in the provision of services to consumers, the commission noted.

Microsoft's initial response noted that the company had received the statement of objections, and continued:

"We are committed to conducting our business in full compliance with European law. We are studying the Statement of Objections now. Under European competition law procedure, Microsoft will be afforded an opportunity to respond in writing to this Statement of Objections within about two months. The company is also afforded an opportunity to request a hearing, which would take place after the submission of this response. Under EU procedure, the European Commission will not make a final determination until after it receives and assesses Microsoft's response and conducts the hearing, should Microsoft request one."

In other words: yes, we've received the statement of objections, and no, we don't have anything to say about it.

As Microsoft noted, the process is that the company has the opportunity to reply to the EC's objections before the commission makes a determination about whether or not Microsoft's conduct is compatible with the antitrust rules under the EC Treaty.

What are other people saying about the EC's statement? See page 3.

Much of the early commentary about the issue appears to be from Americans who see this as a European attack on one of their companies.

That could be regarded as a somewhat arrogant position, as it's tantamount to saying every other country has to work to US rules.

And of course there's the expected response from Microsoft fanboys whining that the EC isn't complaining about the way Apple includes a web browser with Mac OS X.

Hey guys, Apple doesn't have a dominant position to abuse.

Oh, don't forget the earnest free marketeers that see any government intervention in the free market as socialist and evil.

But it's amazing they've got time to even notice what's going on regarding the EC and Microsoft when governments are pouring billions into propping up failing banks and other companies.

It will be interesting to see what sort of defence Microsoft can come up with, and whether it manages to even speak the same language (metaphorically speaking) as the EC.

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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