EC Widens Vista Probe as Microsoft Appeals Fine

Published: October 4, 2006

by Alex Woodie

The battle between the European Commission (EC) and Microsoft continued this week as the software giant formally appealed the €280.5 million (about $357 million) fine that the EC levied in July and the EC expanded its ongoing investigation of Microsoft to determine if the soon-to-be-released Windows Vista operating system will hurt competition in the market for third-party security and handwriting recognition tools.

According to a story in the The Financial Times yesterday, the EC has expanded its probe of Microsoft to determine if plans to add encryption (BitLocker) and handwriting recognition capabilities with Vista will hurt competition. The action was spurred by complaints from small European software developers, according to the publication.

Also in yesterday's FT, American software firm McAfee took out a full-page advertisement slamming Microsoft and its plans for Vista. "Microsoft is being completely unrealistic if, by locking security companies out of the kernel, it thinks hackers won't crack Vista's kernel," McAfee said in the advertisement. "In fact, they already have."

McAfee isn't the only American software company complaining about the new kernel in Windows Vista. Symantec, the reigning giant in the third-party security space, is also ramping up a public relations initiative to raise questions about Microsoft's plans to bolster security in Vista. Neither McAfee nor Symantec has yet made a formal complaint to the EC, although Symantec is reportedly considering it.

The new Windows kernel and BitLocker encryption capability aren't the only new security features raising a ruckus in Windows-land. Microsoft's Windows Defender anti-spyware products, as well as its two antivirus offerings--its application-specific Antigen products and its Windows OneCare Live service--have also raised concerns. Microsoft's decision not to bundle these products with Windows, and to keep them as separately licensable products and services has likely alleviated some scrutiny the company would otherwise endure.

Symantec doesn't seem bothered much by these products. Statements from officials with the company indicate Symantec is confident it can out-innovate and out-sell Microsoft's upstart antivirus and anti-spyware offerings.

What worries Symantec more is control over what the users see and how they behave. Microsoft wants to train Windows users to go to its own Windows Security Center console to configure and control the new security features. While Symantec won past battles over who controls the firewall-related screens, Symantec is afraid that Redmond is bent on taking control of the overall security posture of Windows deployments, and the upcoming kernel-level changes in Vista, Symantec asserts, are among the levers Microsoft is using to keep third parties out.

Appeal of EC Fines

Microsoft had until October 2 to appeal the fine that the EC levied in July for Microsoft's failing to abide by the EC's 2004 ruling, which required the company to do three things: share networking-related information about Windows with competitors, sell a version of Windows XP that didn't include Windows Media, and pay a €500 million fine.

Microsoft complied with two of those requirements--paying the fine and launching Windows XP Home Edition N (where the "N" stands for "no Media Player"; the company had wanted to name the product Windows XP Reduced Media Edition, but the commission rejected that name). The sharing of the networking protocols is where the

Immediately following the EC's July announcement, Microsoft said it would appeal the fine, and it waited until the last day to do so. A decision by the Court of First Instance in Luxembourg likely won't be handed down for more than year or more. The court is also considering Microsoft's appeal of the EC's original €500 million fine in March 2004.

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