European regulators notified Microsoft it believes the software giant is in violation of the region's antitrust laws by bundling its Internet Explorer browser in Windows, the company said on Friday.
The European Commission, which received a complaint in 2007 from rival browser developer Opera that Microsoft was using its market dominance in bundling IE into the Windows operating system, opened its investigation into the tying issue last January.
According to a statement issued by the European Commission: "The evidence gathered during the investigation leads the Commission to believe that the tying of Internet Explorer with Windows, which makes Internet Explorer available on 90 percent of the world's PCs, distorts competition on the merits between competing web browsers insofar as it provides Internet Explorer with an artificial distribution advantage which other web browsers are unable to match."
The statement said that through the tying, Microsoft "shields Internet Explorer from head-to-head competition with other browsers which is detrimental to the pace of product innovation and to the quality of products which consumers ultimately obtain."
It added that the Commission "is concerned that the ubiquity of Internet Explorer creates artificial incentives for content providers and software developers to design websites or software primarily for Internet Explorer which ultimately risks undermining competition and innovation in the provision of services to consumers."
A spokesman for the Commission declined to comment on whether there has been any discussion on whether Microsoft would offer a version of Windows with the browser and one without, much like it did after the Commission ordered it to separate its Windows Media Player from its operating system and offer a version with and without the operating system.
A spokesman for Microsoft declined to comment, noting it would not make statements beyond its press release.
Microsoft, in response to the Commission's statement of objections, said: "We are committed to conducting our business in full compliance with European law. We are studying the statement of objections now."
Microsoft will have two months to respond in writing to the Commission's objections and will also be given an opportunity to request an oral hearing. After assessing Microsoft's written and/or oral response, the Commission will issue a final decision on the matter, which could include a fine, an enforcement order, or a remedy.
Microsoft, meanwhile, further noted in its statement that the Commission indicated in its " statement of objections that the remedies put in place by the US courts in 2002, following antitrust proceedings in Washington, DC, do not make the inclusion of IE in Windows lawful under European Union law.
In reacting to the Commission's objections, rival browser-maker Opera applauded the move.
"We think it is right of the EU for the sake of the consumers to be concerned about someone potentially misusing their competitive power," chief development officer Christen Krogh told ZDNet UK's sister site, CNET News.com.
Antitrust attorneys in private practice in Brussels said the Commission's statement of objections is not a light matter and is likely to pose challenges for the software giant.
David Anderson, an antitrust attorney and partner with Berwin Leighton Paisner in Brussels, said: "The Commission's continued pursuit of Microsoft's tying of its operating system to Media Player and now Internet Explorer sends a clear signal to dominant companies in Europe: the Commission is serious about exclusionary tying and bundling."
Anderson added, however, that if the Commission ultimately requires Microsoft to offer a version of Windows with and without IE bundled in, pricing will play a key role.
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The Commission won the battle but lost the war on its Media Player order, said some antitrust experts. Microsoft was able to offer versions of Windows with and without the Media Player for the same price and, as a result, computer makers and users loaded the Windows version with the Media Player.
But while pricing may be a key issue if the commission opts to require Microsoft to unbundle IE, European antitrust regulators may be reluctant to demand such an order because it would require them to set pricing, and enforce and monitor adherence to the order, Anderson said.
One antitrust lawyer in private practice in Brussels said the Commission was unlikely to require Microsoft to unbundle IE from the operating system, since that remedy did not work well with the Media Player.
Instead, the Commission may consider proposing that Microsoft offer more than one browser with its operating system, noted the antitrust attorney.
And although some antitrust attorneys say they expect similar tying cases to arise with the Commission and Microsoft, this antitrust attorney disagrees.
"The Commission will only go after the really important applications that result in platform monopoly maintenance, in the long term," said the antitrust attorney.
The attorney cited Microsoft's Windows, IE and Office, as well as its server operating software, as examples of a platform monopoly. And, more recently, the attorney said Microsoft is looking to the internet as its next platform for web applications that will be made dependent upon Windows to run and look their best.
The European Committee for Interoperable Systems raised the same issue, noting in a statement: "By tying Internet Explorer to Windows and using proprietary IE standards, and making web applications and web content dependent on Silverlight and .Net, Microsoft seeks to establish itself as the web's gatekeeper."
Meanwhile, Anderson noted that Microsoft may also face an emboldened Commission staff, given the same set of attorneys who won the Media Player case before the European Court of First Instance are the same ones overseeing the IE issue.
Talkback
Another complete load of assinine rubbish from the EC. Why must they interfere in something that has worked very well for as long as I can remember. They should put their own house in order, especially in so far as their accounting work is concerned. Firefox manage perfectly with Thunderbird mail, Google with their Gmail etc., so why can't Opera incorporate their own email program?
Do you not know what Internet Explorer is?
I work with a gentleman that recently bought his first computer, and it came
with windows pre-installed, which should be illegal. He did not know there was an another browser available. I helped him get his new machine cleaned up, after less than a month, because of all the adware, and malware, thanks to IE's lack of security.
apart from the fact that the article is talking about a browser being intergrated into the operating system is a bad thing thing for open competition. but i guess from your reply, we should be surprised that you didn;t understand the article or the problem.
Since many Microsoft (and other) web pages are unusable with rival browsers such as Firefox, it will be necessary for most if not all people to have IE installed anyway. Whilst I'm no great fan of IE, it would help if the EC would take the trouble to establish what the side-effects of such a measure would be before going off half cock.
As a product matures, it gains features. We can read text files with notepad, but no-one is complaining because they can't see a way to make money with a notepad replacement. As windows progresseed, Wordpad gained the ability to read and write in Word 6 format. This is because people expected a modern OS to be able to do that due to the word 6 formats' popularity. I didn't see Microsoft worrying that it would sell less copies of Microsoft Word! This shot in the foot was a genuine attempt to provide expected features to the OS.
The popularity of HTML meant that people expected Windows to be able to work with HTML files. It just so happens that other companies want to make money from this format, so they are kicking up a fuss.
I expect Windows to be able to manage it's hard drives. Indeed, there are disk partitioning and defragmentation tools built in. Are Diskkeeper, Powerquest or Symantec complaining to the EC?
Microsoft have developed a desktop 'platform', just as many vendors have with the servers. Just look at Red Hat or Citrix's virtualisation platforms. Microsoft isn't complaining, they are building one of their own.
Users expect certain things of a desktop OS and a few companies are finding that they can make money on these facilities, however, when Microsoft adds improvements to their OS to keep it up to date, they are getting into trouble under abnti-competition rules.
I haven't seen car manufacturers come under anti-competitive fire for adding car stereos, CD changers, MP3 players or many other features that were previously addons developed by a third party! What makes the likes of Opera special throughout the manufacturing world?
I understand Micrsoft has acted unfairly in many ways and I agree with the sentiments that Microsoft shouldn't use it's power to push other people out. But improving your product to keep up to date (just as apple and linux verndors do) should not be illegal. There are many other Microsoft actions that were unfair that creates a big enough bandwagon for anti-microsoft people to jump on.
There were many 'improvement' made to HTML by Microsoft. But then again, Netscape did the same thing. his was one form of innovation. Some were adopted by the standards organisation, some weren'. Perhaps we should have rules whereby if Microsoft (or anybody else) do something that veers away from a known standard (say HTML4.0 or one of the XML document formats) , then they have to make the details publicly available so other ISV's can add the same 'improvements' if they think they are viable.
So following this line of attack on Microsoft, why aren't the EC jumping down the throats of the ubuntu? It is being put on the super-cheap netbooks being found everywhere from Maplins and Toys R us to Tescos). This OS includes a web browser, office package, media player etc. The cheapness of these products is beginnning to make a monopoly on cheap netbooks. People don't need to source 3rd party applications. This is tying. I think it is the state of the market and as a practice, it is ok. But if it is bad ro Microsoft, then surely it should be bad for everyone who does it.
And what about Apple who includes Safari with it's OS. They have a bigger monopoly on MACs than Microsoft does on PC's. Microsoft aren't complaining about lack of downloads of IE on a Mac!
Come on folks, let's stop being silly, inventing rules to protect a few wealthy companies whose once specialist product is now competing with the features of an OS that is simply remaining up to date.
Oh, the Article blamed .net as well as Silverlight. .Net has no bearing whatsoever on peoples ability to view websites, whereas Silverlight is a competitor to flash. Get your facts right.