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Originally published July 17, 2012 at 8:09 PM | Page modified July 18, 2012 at 11:11 AM

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EU opens antitrust inquiry of Microsoft over browser

The European Union's executive body, the European Commission, said Tuesday that it was opening an investigation into whether Microsoft has...

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BRUSSELS — The European Union's executive body, the European Commission, said Tuesday that it was opening an investigation into whether Microsoft has kept the antitrust commitments it made in 2009, and warned that penalties for noncompliance would be "severe."

Microsoft conceded it had "fallen short" of its obligation to provide the "browser choice screen," or BCS on copies of Windows. The screen allows Windows users to select a browser other than Microsoft's Internet Explorer as the default.

"Due to a technical error, we missed delivering the BCS software to PCs that came with the Service Pack 1 update to Windows 7," Microsoft said in a statement.

The company said that PCs running the original version of Windows 7, as well as Windows XP and Windows Vista, did have the screen.

"While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it," Microsoft said.

EU Competition Commissioner Joaquin Almunia indicated to reporters that the issue may have affected up to 28 million customers. Microsoft had promised to provide the choice screen in 2009 after an antitrust case.

Microsoft submitted a report to the commission in December asserting that the browser choice screen was being provided as required. In its statement Tuesday, the company said it believed at the time that was the case.

The company said it had retained outside counsel to conduct a formal investigation of how the technical error occurred and to make suggestions to avoid such compliance problems in the future.

It also said that it was offering to extend the time during which it is obligated to display the choice screen by an additional 15 months.

"We understand that the commission will review this matter and determine whether this is an appropriate step for Microsoft to take," the statement said. "We understand that the commission may decide to impose other sanctions."

The latest development stems from Microsoft's agreement in 2009 to offer a choice of rival Web browsers on Windows to ward off additional fines.

Rivals had complained that attaching Internet Explorer to Windows by default was an unfair way for Microsoft to put its Web software on most of the world's computers.

The competitive landscape has changed greatly since then, however. Rival browsers such as Mozilla's Firefox and Google's Chrome have gotten more use, and apps on mobile devices have started to replace browsers as gateways to online content.

The development comes just weeks after a European court upheld most of a massive fine that the European Commission had levied against Microsoft in 2008 for failing to fully comply with an order covering technical documents it had to share with rivals.

At the time, the ruling closed the last of EU's active cases against Microsoft, which dated back to 1998.

Keith Hylton, a law professor at Boston University, said the commission was overreacting.

"There may be a few people on the planet, living deep in forests on the Marshall Islands, who are not already aware that Microsoft's Internet Explorer is not the only browser available," Hylton said. "Google's reminders about Chrome are hard to escape."

Hylton said that, in the U.S., courts would ask for evidence that consumers had be harmed — evidence Hylton said he doubted could be found in the Microsoft case.

He speculated that the commission was either protecting domestic competitors or raising revenue.

Anthony Michael Sabino, a professor of business law at St. John's University in New York, said the commission was entitled to enforce its settlement, but its "unremitting hostility" reflected the difference between U.S. and European antitrust enforcement.

"In the U.S., the law protects competition; in Europe, the antitrust regulators use the law to protect competitors, especially homegrown ones," Sabino said.

Almunia said this would be the first time that this type of legally binding agreement has not been complied with.

"Needless to say, we take compliance with our decision very seriously," he said. "If the infringement is confirmed, there will be sanctions."

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