Wednesday April 04 12:41 AM EDT

EC Gets in Line to Tackle Microsoft

By Boris Gröndahl

(The Industry Standard)

While the battle by the U.S. government to curtail Microsoft's virtual monopoly in the computer market seems to be turning in the software giant's favor, Bill Gates can't relax just yet. The European Commission is now set to enter the arena with its own competition case.

At a press conference during his visit to Washington, D.C., on Friday, European Competition Commissioner Mario Monti said he would soon decide on "whether there are new elements to justify additional objections" against Microsoft.

Monti said he would take his decision after his department had examined "[Microsoft's] more than 9,000 pages" of reply. A formal hearing is to be held in Brussels "soon."

"At this stage, in spite of Microsoft's claim that what they do is to the benefit of consumers and innovation, we are not sure that their concept of interoperability and their market behavior ensures a competitive scenario," Monti said.

The EC is investigating whether Microsoft has abused its monopoly power in the PC market with its Windows operating system. The charge is that it has used this power to increase its share of the market for operating systems that power servers for Web sites and other computer networks.

John Frank, Microsoft's European director of law and corporate affairs, said it had so far not been informed of a hearing. "Unlike merger cases, regulatory cases don't have a strict time schedule," he said. "The timing of the case is up to the commission."

The EC's case originally stemmed from a complaint made by Sun Microsystems, the server manufacturer. Sun claimed Microsoft had withheld key technical information so that PCs running Windows couldn't link to Sun servers - which are based on the Unix server system - as seamlessly as they could to Microsoft's NT servers. Sun, which has lost significant market share as Unix customers switch to Windows NT, has been a major force behind the anti-Microsoft case in the U.S.

The commission started its own investigation into that same complaint in February 2000, after the launch of Windows 2000. The formal statement of objections against Microsoft in the Sun case was issued in August. In November, the company replied with "large boxes full of developer information," according to Frank.

If the commission finds Microsoft guilty of abuse of its monopoly position, it has two penalties to choose from. In theory it could fine the company up to 10 percent of its worldwide revenue, although such a high fine has never before been levied. In practice it is more likely to force Microsoft to disclose additional technical information, or even to make parts of its products open to its competitors.

Victorya Hong in Brussels contributed to this report.

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