EU accuses Microsoft of harming browser competition

LOS ANGELES/BRUSSELS Fri Jan 16, 2009 9:05pm EST

Microsoft Chairman Bill Gates speaks at a news conference event to introduce Windows Vista and Office 2007 in New York January 29, 2007. REUTERS/Shannon Stapleton

Microsoft Chairman Bill Gates speaks at a news conference event to introduce Windows Vista and Office 2007 in New York January 29, 2007.

Credit: Reuters/Shannon Stapleton

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LOS ANGELES/BRUSSELS (Reuters) - The European Commission accused Microsoft Corp on Friday of stymieing competition by bundling its Internet Explorer Web browser with Windows systems, firing the latest salvo in an expensive, years-long battle with the software titan.

The executive arm of the European Union reached the preliminary view that the company, which controls roughly three-quarters of the Web browser arena, had prevented rival browsers from competing and had infringed EU rules by abusing its dominant position.

It added that Microsoft had eight weeks to reply to a "statement of objections" sent to the company, in which it threatened to impose a fine on the U.S. software giant if its preliminary findings were confirmed.

Microsoft has had to shell out over $1 billion in fines to the commission in the past.

The Commission "sets out evidence and outlines its preliminary conclusion that Microsoft's tying of Internet Explorer to the Windows operating system harms competition between Web browsers, undermines product innovation and ultimately reduces consumer choice," the EU executive said in a statement.

"If the preliminary views expressed in the statement of objection are confirmed, the Commission may impose a fine on Microsoft, require Microsoft to cease the abuse and impose a remedy that would restore genuine consumer choice and enable competition on the merits."

Microsoft and the EU have engaged in a running spat over competition issues for years, and the U.S. company has been fined several times for allegedly abusing its 95 percent dominance of personal computer systems through its ubiquitous Windows software.

"This case is about the future, about maintaining an open and dynamic Internet," said Thomas Vinje, a Clifford Chance lawyer representing ECIS, a non-profit organization that promotes market conditions in the tech sector.

"Microsoft has achieved ubiquity for IE (Internet Explorer). This ubiquity distorts competition and favors Microsoft's monopolies in ways completely unrelated to the merits of Microsoft's products."

Microsoft said in a separate statement on Friday that it was studying the Commission's views and did not rule out requesting a formal hearing.

It cited the Commission as saying that remedies put in place by U.S. courts in 2002 after antitrust proceedings also did not make Windows-Explorer bundling lawful.

"We are committed to conducting our business in full compliance with European law," the company said in a short statement.

In February, the EU fined the U.S. software company a record 899 million euros for discouraging software competition, the biggest ever imposed on a corporation at the time.

Microsoft controls an estimated three-quarters of the Web-browsing market through Explorer.

Analysts say that the firm has diversified enormously and is now no longer so reliant on its Windows system, with revenue coming in from Xbox sales and server software.

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