Microsoft says EU may boost Google dominance: report

A sign hangs at the Microsoft booth at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada January 9, 2009.

BRUSSELS (Reuters) - Microsoft says EU regulators will hand Google more dominance of the Internet search business if they go ahead with planned regulations on Microsoft's Windows operating system, the Financial Times reported.

The FT said on Saturday that the move by Microsoft was contained in a confidential last-minute submission to the European Commission aimed at heading off antitrust action.

A Commission spokesman said in response to the report: "The Commission will examine all the arguments outlined by Microsoft in their reply to the statement of objections."

Microsoft officials could not immediately be reached for comment.

The Commission, which regulates competition in the 27-country European Union, has charged Microsoft with seeking to stymie rivals by tying the firm's Web browser to its dominant Windows system.

Microsoft replied to the EU antitrust charges, a so-called "statement of objections," on April 28. It is due to respond orally to the accusations in early June.

By bundling Internet Explorer with Windows, Microsoft shielded its browser from competition with rival products, harming innovation and reducing customer choice, the Commission had said.

Microsoft has said the Commission may order it to distribute other browsers with the operating system.

But the newspaper reported that Microsoft had questioned in its official response, a copy of which the FT had seen, whether such a proposal from the Commission would be legal.

The company claimed competition would be harmed in the Internet search market, the report said.

This is because two of the main rival browser companies, Opera and Mozilla, maker of the Firefox browser, have agreements with Google so their browsers automatically default to the Google search engine, as does Google's browser, Chrome, it said.

Also, if the screen showing computer users their browser choices is created by the PC makers, Google could work directly with these manufacturers and have them set the search defaults in its favor, the paper cited the software company as saying.

Microsoft also contends that a requirement to distribute other browsers with Windows could infringe its brand rights and impose a potential intellectual property liability, the paper said.

(Writing by Dale Hudson, Editing by Peter Blackburn)