EU Opens Fresh Antitrust Investigation of Microsoft

Published: January 16, 2008

by Alex Woodie

Microsoft is likely to be feeling a strong case of déjà vu this week following an announcement by the European Commission that it's opened two new investigations against the company. The regulator's first investigation will see whether the company failed to supply interoperability information for the Office suite, server products, the .NET Framework, and its new Open XML format, while the second probe will look into potentially illegal product bundling with Windows, including Internet Explorer (again), its desktop search offering, and Windows Live.

It's been less than three months since Microsoft dropped its remaining appeals against the EC following a big defeat in Europe's second-highest court, which led the software giant to concede to the regulator's request to require Microsoft to make communications protocols easily accessible to its competitors.

After nearly a decade of legal wrangling and squabbling, it appeared that the relationship between the EC and Microsoft was moving on. "We believe it's important at this stage to focus all of our energies on complying with our legal obligations and strengthening our constructive relationship with the European Commission," Erich Andersen, Microsoft's head lawyer in Europe, said at the time. Neelie Kroes, the head of the EC's antitrust division, sounded equally optimistic about moving forward. "I hope we can close this dark chapter in our relationship," she said.

And a new chapter it is. But apparently, the new chapter is going to look a lot like the old chapters.

On Monday, the EC announced it launched two formal investigations of Microsoft to see if it has abused its dominant market position. No charges have been filed at this point, and Microsoft says it will cooperate with the investigations.

The first probe will investigate whether Microsoft illegally refused to disclose interoperability information across a broad range of products, including Office, several unnamed server products, and the .NET Framework. "The commission's examination will therefore focus on all these areas, including the question whether Microsoft's new file format Office Open XML, as implemented in Office, is sufficiently interoperable with competitors' products," the EC says.

This first probe was filed following a complaint to the EC by the European Committee for Interoperable Systems, a group formed in 1989 that includes IBM, Oracle, and Sun Microsystems as members. The ECIS filed a complaint nearly two years ago over concerns that the new XML-based document format used in Office 2007, Open XML, would be incompatible with Sun's StarOffice productivity suite and the open source OpenOffice suite, both of which use the OpenDocument Format (ODF) standard, which is also based on XML.

The second investigation will focus on whether Microsoft damaged its competitors by illegally bundling products and services with its Windows operating system. This investigation was spurred in part by Opera, developer of the Opera Web browser, which filed a complaint with the EC alleging that the inclusion of Internet Explorer with Windows is causing "ongoing competitive harm" to Opera. In particular, the EC will look into Opera's complaint that "new proprietary technologies" in IE (which were not named) are reducing compatibility with open Internet standards and hurting competition.

The second investigation will also look into the bundling of other products with Windows, including desktop search and Windows Live, which the EC says has made other complaints.

Microsoft says it will work with the EC to resolve the situation. "We will cooperate fully with the commission’s investigation and provide any and all information necessary," a company spokesperson said. "We are committed to ensuring that Microsoft is in full compliance with European law and our obligations as established by the European Court of First Instance in its September 2007 ruling."

Interestingly, the company that started the bulk of Microsoft's antitrust troubles, Netscape, which is now owned by America On-Line, is bowing out of the browser market. AOL recently announced that after February 1 it will no longer support Netscape Navigator. It's difficult to tell if that is a sign that all the antitrust action against Microsoft was for naught, or whether making Web browsers simply isn't that great of a business plan anymore.

Microsoft continues to dominate the Web browser market, but its position is slipping. According to TheCounter.com, as of the fourth quarter of 2007, Netscape Navigator had less than a tenth of one percent of the global Web browser market share, compared to about 81 percent for Microsoft's IE (down 3 percent in a year), nearly 14 percent for Mozilla's Firefox (up about 3 percent in a year), and two-thirds of a percent for Opera (up slightly).

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