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New Vista for Microsoft is Antitrust Issue for EU Kroes Targets Next- Generation System

Posted on: Thursday, 30 March 2006, 12:00 CST

By Paul Meller

Microsoft and the European Commission are on a collision course over the shape of the company's next-generation computer operating system, Windows Vista.

Neelie Kroes, the commissioner in charge of competition and Europe's top antitrust official, last week wrote to Steve Ballmer, the chief executive of Microsoft, informally warning him that the plan to bundle security features, search tools and other similar stand-alone software products into Vista would violate European antitrust laws, her spokesman Jonathan Todd said Wednesday.

"We are concerned about the possibility that Vista will include software elements which are available separately, either sold by Microsoft or by other software companies," Todd said.

The warning about Vista comes as Microsoft's top lawyers gather with regulators and competitors at a Brussels hearing about the company's compliance with a 2004 antitrust ruling against it, which found Microsoft guilty of bundling its Media Player software into the Windows operating system, to the detriment of competing music and video playing software programs.

Microsoft's top lawyer in Europe, Horacio Guttierez, said Wednesday that adding such functions into the operating system was essential if Microsoft was to meet customer demand. "I know consumers want more secure computer systems," he said.

Vista, which is expected to go on sale at the beginning of next year, is likely to include a tool called Windows Defender, which is designed to seek out so-called spyware files that enter PCs through e-mail or from Web sites, and secretly observe them when they are connected to the Internet.

Forcing the company to sell Vista without Windows Defender "is a bit like forcing BMW to sell cars without airbags," Guttierez said. "We have a responsibility to make our products better and more secure for our customers," he said.

The commission's concerns about Vista echo the findings in its 2004 antitrust ruling, which found that the software giant had stifled competition by withholding vital information about Windows from rival makers of server software, preventing them from building products that could interoperate with the ubiquitous Windows.

Kroes outlined the same concerns with Vista. "There is also the possibility that we won't have all the technical information needed for competitors to make their software interoperable with Vista," Todd, her spokesman, said.

With Vista there are at least four different bundling issues, as opposed to just one in the 2004 case. "The commission is concerned that computer manufacturers and consumers won't have a proper choice of software," he said.

In February, IBM, Oracle, Sun Microsystems and six other computer makers submitted a joint complaint to the commission, claiming that Microsoft was continuing to abuse its position in the software market in spite of the 2004 ruling.

"Microsoft is building Windows Vista to provide the most secure personal computing environment and to provide unprecedented opportunities for other companies throughout the industry," Microsoft said Wednesday in a statement.

No formal investigation has been opened yet, but Todd said, "If our concerns are confirmed and we conclude that Vista violated European competition rules then we would open a new case."

"We expect that Microsoft will design Vista in a way which is in line with the European competition laws," Kroes said in an interview published in the Wall Street Journal Europe on Wednesday. "It would be rather stupid to design something that is not," she added.

In December, the commission issued a new lawsuit against Microsoft, accusing it of failing to provide the technical documentation needed by rival server software makers, which it was ordered to reveal in the 2004 ruling.

In the two-day hearing which begins Thursday, Microsoft will explain that in spite of its best efforts to comply, the commission has set the company an impossible task.

"It will take a real life application to judge whether the documentation is adequate," Guttierez said.

"Trying to create a test looking at the documentation in abstract is not consistent with the way the industry works," he added.

If Microsoft fails to change the commission's mind, it faces daily fines of as much as 2 million, or $2.4 million, backdated to mid-December, until it is deemed to be in compliance with the 2004 ruling.

Source: International Herald Tribune

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