Microsoft booths at the Consumer Electronics Show in Las Vegas. The European Commission said that it had sent a statement of objections to Microsoft over the packaging of its Web browser, Internet Explorer, with Windows. (Rick Wilking/Reuters)

EU revives Microsoft antitrust case

By Kevin J. O'Brien

Published: January 19, 2009

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BERLIN: A year after throwing in the towel in its huge legal battle with the European Union, Microsoft is facing new charges of abusing its dominant position with the Windows operating system.

But this time, legal experts say, the European authorities may have a harder time winning their case because Microsoft may in fact be losing market share - at least in some segments of the software market.

The European Commission, which enforces antitrust law for the EU as its executive arm, confirmed late Friday that it had sent a statement of objections to Microsoft over the packaging of its Web browser, Internet Explorer, with Windows.

The commission said its "preliminary view" was that Microsoft was again blocking "genuine consumer choice" and "competition on the merits" - as in the previous case involving its media player. If found guilty of infringing EU rules on "abuse of a dominant position," Microsoft could face another fine and be required to change its business practices.

On Monday, Anne-Sophie de Brancion, a spokeswoman for Microsoft, said it was still studying the complaint and had no comment.

Microsoft, which has already paid more than €1 billion, or $1.3 billion, in past fines, was given eight weeks to respond.

Some legal experts said they were puzzled by the EU's action, which stemmed from a complaint filed in December 2007 by Opera, an Oslo-based maker of a competing Web browser. Microsoft is already working under a U.S. consent decree covering Internet Explorer.

Recent market studies suggest that Microsoft's Internet Explorer may be losing ground to competing browsers like Mozilla's Firefox, Apple's Safari and Google's Chrome.

"Frankly, I am very confused by this latest complaint," said Denis Waelbroeck, a professor of competition law at the Free University of Brussels. "The timing is all wrong and the case on browsers is not black and white."

But Thomas Vinje, a Brussels-based lawyer representing Opera, said the commission would not be looking into the complaint if they did not think it was "problematic."

"As Web computing becomes more significant and the possibilities for computing independent of the underlying operating system grow dramatically, this is a battle for the future," he said.

Microsoft's previous, nine-year legal fight with the commission centered in part on its bundling of the Windows Media Player into Windows, which is found on more than 90 percent of computers in the world, according to the research firm Gartner.

Microsoft eventually dropped its challenge after losing an appeal before the European Court of First Instance in September 2007.

While that fight generated huge legal bills and reams of negative publicity for Microsoft, the remedies imposed have not appeared to dent the company's business in Europe.

The commission ordered Microsoft to sell a separate version of Windows in the EU without Windows Media Player. Microsoft complied, but consumers rejected the stripped-down software in favor of the full version with the player, which was sold at the same price.

This time, the commission may be considering other options, like requiring Microsoft to include the competing browsers in Windows, Vinje said. But other lawyers said such a remedy would be unprecedented and difficult to impose.

"This is a question about who designs software, the private sector or the regulators?" said Alec Burnside, a competition lawyer in Brussels at Linklaters, a firm that has represented Microsoft. "Can you really imagine Microsoft supporting a Google platform?"

Also likely to play a role in the investigation are current developments in the browser market. According to Net Applications, a research firm in Aliso Viejo, California, Microsoft had 68 percent of the global browser market, versus 21.3 percent for Firefox, 7.9 percent for Safari, 1.0 percent for Chrome and 0.7 percent for Opera.

Microsoft's share is down from more than 80 percent a few years ago.

Vinje disputed the figures, saying his own research showed Microsoft's market share to still be about 85 percent. The prevalence of Microsoft's browser, he said, is encouraging some Web page designers to create Internet sites that function smoothly only with Internet Explorer, putting competitors at a disadvantage.

Others said growing competition was making the complaint moot.

"This is clearly a follow-on to the previous investigation, but the dominance isn't as clear," said Damien Geradin, an antitrust lawyer in Brussels at Howrey.

Under a 2002 consent decree, the U.S. Justice Department monitors Microsoft's use of Internet Explorer to ensure competitors are not disadvantaged through the Windows operating system.

Jonathan Todd, a spokesman for the European Commission's competition division, said the investigation was beginning and it was too early to speculate on outcomes or legal sanctions that could be placed on Microsoft.

Microsoft could request a private hearing, after which the commission could take up to a year for a decision, which Microsoft could then appeal in court.