Antitrust: Commission statement on Microsoft Internet Explorer announcement

The European Commission notes with interest Microsoft's announcement of its plans for Windows 7, and in particular of the apparent separation of Internet Explorer (IE) from Windows in the EEA. The Commission will shortly decide in the pending browser tying antitrust case whether or not Microsoft's conduct from 1996 to date has been abusive and, if so, what remedy would be necessary to create genuine consumer choice and address the anticompetitive effects of Microsoft's long-standing conduct. In terms of potential remedies if the Commission were to find that Microsoft had committed an abuse, the Commission has suggested that consumers should be offered a choice of browser, not that Windows should be supplied without a browser at all.

At the level of both computer manufacturers and retail sales, the Commission's Statement of Objections (SO) suggested that consumers should be provided with a genuine choice of browsers. Given that over 95% of consumers acquire Windows pre-installed on a PC, it is particularly important to ensure consumer choice through the computer manufacturer channel.

As for retail sales, which amount to less than 5% of total sales, the Commission had suggested to Microsoft that consumers be provided with a choice of web browsers. Instead Microsoft has apparently decided to supply retail consumers with a version of Windows without a web browser at all. Rather than more choice, Microsoft seems to have chosen to provide less.

As for sales to computer manufacturers, Microsoft's proposal may potentially be more positive. It is noted that computer manufacturers would appear to be able to choose to install Internet Explorer - which Microsoft will supply free of charge - another browser or multiple browsers. Were the Commission to conclude that Microsoft's behaviour has been abusive, it would have to consider whether this proposal would in itself be sufficient to create genuine consumer choice on the web browser market. The Commission would inter alia take into account the long standing nature of Microsoft's conduct. It would also have to consider whether this initial step of technical separation of IE from Windows could be negated by other actions by Microsoft.

Consumer Choice and Innovation
The development of new online services makes web browsers an increasingly important tool for businesses and consumers, and a lack of real consumer choice on this market would undermine innovation.

The Commission's preliminary concerns are set out in detail in a Statement of Objections sent to Microsoft in January. The specific circumstances of Microsoft's tying of IE to Windows in this case would appear to lead to significant consumer harm.

The SO sets out the preliminary view that, should the Commission conclude that Microsoft's conduct was abusive, any remedy would need to restore a level-playing field and enable genuine consumer choice between Internet Explorer and third-party web browsers, in order to bring the infringement effectively to an end. A potential remedy to these concerns, which the Commission considered in the SO and which would not require Microsoft to provide Windows to end-users without a browser, would be to allow consumers to choose from different web browsers presented to them through a 'ballot screen' in Windows.

Background
A Statement of Objections is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of a Statement of Objections can reply in writing to the Statement of Objections, setting out all facts known to it which are relevant to its defence against the objections raised by the Commission.

Microsoft replied to the SO on 28 April 2009. The Commission is currently considering Microsoft's reply, and additional evidence in the case, and has not yet reached any conclusion.

The Commission's assessment would be guided in particular by the principles laid down by the Court of First Instance in its judgment of September 2007 in the Microsoft case regarding the tying of Windows Media Player