Microsoft to seperate Windows 7 from IE; EU regulator sceptical

Microsoft's announcement that it would sell its Windows 7 in Europe without bundling in its Internet Explorer has not impressed the European Commission, which said that it would proceed with the anti-trust case, in which the software giant is accused of having taken unfair advantage over its rivals by bundling Internet Explorer with the Windows operating system.

Regulators have been investigating Microsoft since 2007, following two complaints - one by the makers of the Norwegian web browser Opera, and another from the industry group European Committee for Interoperable Systems (ECIS), accusing Microsoft of unfairly obstructing the ability of rival applications to work on its operating systems.

They say the practice of bundling Internet Explorer with Windows put competitors at an unfair disadvantage.

In a blog post, Microsoft's deputy general counsel Dave Heiner said, ''Given the pending legal proceeding, we've decided that instead of including Internet Explorer in Windows 7 in Europe, we will offer it separately and on an easy-to-install basis to both computer manufacturers and users. This means that computer manufacturers and users will be free to install Internet Explorer on Windows 7, or not, as they prefer. Of course, they will also be free, as they are today, to install other Web browsers.''

Europe's antitrust regulator, the Brussels-based European Commission responded immediately within hours through a statement on its website, "The 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 added that it would ''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.''

Faulting the software giant, whom the regulator has been pursuing relentlessly over its marketing practices, the Commission said, ''As for retail sales, which amount to less than 5 per cent 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.''

Mozilla Firefox, Apple Safari and Google Chrome, as well as Opera are some of the players in the browser market and in February 2009, Google sought permission from the European Commission to be a party in EC's antitrust investigations against software giant Microsoft. (See: Google teams up with Opera to challenge Microsoft supremacy)

Google's move to join Opera in confronting the software giant's dominance of the internet browser market represents a significant escalation in the 'browser wars' and the battle over how users view the internet.

Microsoft's Internet Explorer, which had an overwhelming 90-per cent share of the browser market in 2004, has seen its dominance erode over the years and now has a market share of 65 per cent after its popular rival, Firefox, made inroads into browser market.

Earlier in 2004, Microsoft had lost a European anti-trust case and was forced to sell a version of Windows without its Media Player software. Then, too, Microsoft had withdrawn the Media Player software from Windows prior to the ruling.

The Commission had then ruled that Microsoft had taken unfair advantage in the market by bundling its Windows Media Player with Windows and ordered the company to sell a version of Windows without the media player.

Opera reacted to Microsoft's latest move saying that it was now playing the same game that it did with its Media Player software in 2004 and added that the software giant had stifled competition since 1996 by taking unfair advantage by bundling its Internet Explorer with Windows operating system.

Opera's  lawyer said that Microsoft must be penalised for taking unfair advantage over competition for over a decade.

Microsoft was hit by a fine of 497 million euros ($688.84 million) in September 2007 after Europe's second-highest court dismissed its appeal against the 2004 EU antitrust ruling. (See: Microsoft loses anti-trust appeal; compelled to provide Windows without Media Player)

In the current case, the European Commission, in its preliminary findings, had concluded that Microsoft was involved in anti-competitive behaviour, and had indeed created an unfair advantage for  its web browser in violation of European law since 1996.

In a last-ditch bid to stall the proceedings, Microsoft had last month informed the European Commission that it could not attend the anti-trust hearing scheduled from 3 to 5 June as it was gping to coincide with a "most important worldwide intergovernmental competition law meeting" in Zurich, Switzerland. (See: Microsoft evades European Commission anti-trust hearing)

However, the European Commission denied Microsoft's request for rescheduling the hearing, saying that those were the only dates it had available in Brussels for the hearing.

The Commission's ruling on this case was expected later this year, but with this new development, the regulator may give its ruling sooner.

See: Dave Heiner's blog post, "Working to Fulfill our Legal Obligations in Europe for Windows 7" and Antitrust: Commission statement on Microsoft Internet Explorer announcement