January 16th, 2009

Here we go again: EC complains about IE integration in Windows

Posted by Mary Jo Foley @ 12:03 pm

Categories: Corporate strategy, Internet Explorer, Legal

Tags: European Commission, Microsoft Internet Explorer, Microsoft Corp., Integration, Microsoft Windows, Web Browsers, Corporate Law, Operating Systems, Software, Internet

The European Commission had been awfully quiet for the past few months. But just half way into January, the Commission has come out swinging again against its favorite punching bag: Microsoft.

It seems the EC’s new “statement of objections” is based on Opera Software’s 2007 antitrust complaint against Microsoft. (Here is the press release from Opera on its December 2007 complaint.)

From Microsoft’s “On the Issues” blog:

“A legal action we received yesterday (January 15) from the Directorate General for Competition of the European Commission.  (DG Comp, to use the shorthand, sets and enforces marketplace rules that apply to all companies doing business in Europe).

“The ‘Statement of Objections’ concerns our practice of including Internet Explorer browsing technology in the Windows operating system, which we’ve done since 1996.

We’ll provide a formal response to DG Comp within the next two months. In the meantime, since this is a legal matter, we won’t have much to say publicly.”

Microsoft is expected to deliver a near-final Release Candidate (RC) of Internet Explorer 8 some time this quarter. The final release is expected to ship this year as both a standalone browser and an integrated piece of Windows 7.

If you thought the issue of whether or not IE is really “part” of Windows (or a bundled component) was settled almost a decade ago by the U.S. government, you’d be right. But the EC is saying that the U.S. decision applies to the U.S. and not the EU.

Again from Microsoft’s On the Issues blog:

“The Statement of Objections states that the remedies put in place by the U.S. courts in 2002 following antitrust proceedings in Washington, D.C. do not make the inclusion of Internet Explorer in Windows lawful under European Union law.”

I never bought the whole idea that IE was an inextricable part of Windows, and feel Microsoft failed to prove its case. But Microsoft was allowed by the courts to continue to package the two together. In 2009, Opera’s objections regarding IE bundling seem awfully late….

Plus, remember when Microsoft removed Media Player from some versions of Windows in the EU? No one bought the player-free releases; they stuck with the player-bundled Windows.

Is a browser-free Windows release something that would only benefit Microsoft’s competitors and not customers? What do you think?

Update (5:45 p.m. ET on January 16): The EC’s “statement of objections” doesn’t sound as innocuous as I initially assumed.

Based on comments from a couple of industry observers with whom I’ve spoken, it sounds like the EC basically is presenting its findings at this point, and Microsoft — after having a chance to “respond” within the next eight weeks — is going to be required to take some kind of remedial action. It’s not clear if the EC will try to force Microsoft to unbundle IE from current/future versions of Windows sold in the EU; offer links to other browsers as part of the initial Windows set-up page, or what.

Ben Edelman, an assistant professor with Harvard Business School (who noted he has done some consulting work with Microsoft in the browser-competition space), had this to add:

Today’s developments “feel like last decade’s fight, especially given recent (marketshare) gains by competing browsers.  Every other operating system has a browser as part of it.”