Microsoft 'tying' Media Player to OS may backfire in Europe

February 29, 2004

After 18 months of
negotiation, the European Commission is wrapping up an investigation that they
say will prevent Redmond from dominating the digital market. Taking a tougher
stance on Microsoft Corp.'s use of its market power than the United States
recently took, Europe is proposing remedies for alleged non-competitive behavior
that include greater interface disclosure requirements and potentially the
unbundling of Windows Media Player from the operating system.

The European Commission said last August that it
had contacted a majority of small, medium and large enterprises in all
industries across Europe. They were told by these businesses that
interoperability factored into their purchasing decisions. The Commission
concluded that the amount of interface information that Microsoft discloses
alters consumer choice in favor of Microsoft server products. Insufficient
interoperability between Windows and rival products is impeding competition they
found.

The commission said it also found that by tying
Media Player to Windows, Microsoft is weakening competition, stifling product
innovation and ultimately reducing consumer choice. This is the same song we
heard during the browser wars and it was of course later resolved in that
Internet Explorer is a removable application. However, the Seattle based
software giant is making the claim again, so the Commission is going to help
them find a solution. Of course Microsoft is not going to be pleased with any
settlement that weakens their position or reveals any of the tightly guarded
code to their OS.

If Microsoft chooses to ignore the objections and remedy proposals,
the commission can impose a fine of up to 10 percent of the company's annual
sales, said Wilfried Schneider, spokesman for the delegation of the European
Commission in Washington. "If they would comply with the proposals, there would
be no fine, obviously," Schneider said. "If they implement the remedies that the
commission wants them to, then there's no fine."

Now we come to the present, in this report
from IT World, dated February 26, we can
read that an unnamed source close to the situation says, the Commission has
determined that Microsoft is guilty of anti-competitive behavior and will meet
on the 15th of March to discuss what actions will be taken:

The Commission believes
Microsoft is guilty of abusing the dominant position of its Windows
operating system - a view likely to be supported by the national
regulators, said the diplomat, who preferred not to be
identified.

A second meeting will be
convened within a week to discuss what remedies to impose on Microsoft to
prevent it from continuing to break EU antitrust laws. The second
gathering of the so-called advisory committee will also discuss how much
to fine the company.

"I expect more debate among
the national regulators and the Commission at the second meeting," the
diplomat said.

A final ruling by the
Commission normally follows a few days after the second committee meeting,
probably on March 23 or 24.

Microsoft has said it still
hopes to settle with the European Commission before it makes its
ruling.

The Commission, which decides
on the timing of these meetings, declined to comment.

Microsoft has broken
antitrust law on two counts, according to a draft Commission ruling. By
tying in its Media Player music and video playing software into Windows,
Microsoft has put rival players at an unfair competitive disadvantage, the
Commission found.

By withholding crucial
information about how Windows works, the company has also disadvantaged
competitors in the market for server software that runs networks of PCs.
Microsoft's own server software works better with Windows on PCs than
rivals' server systems, the Commission found.

Mario Monti, the European
Commissioner for competition, wants Microsoft to propose within a few
months of the ruling what computer code inside Windows that should be
revealed to create a level-playing field in the server software
market.

To restore a level-playing
field in the media player market, the Commission wants Microsoft to sell
two versions of Windows: one with Media Player stripped out and sold
separately, and the other with the software included, a person close to
the case said.

This looks to be bad news for Microsoft, who
is very much aware of the importance of digital dominance in this particular
point in time. It is no secret that the venerable PC is beginning to evolve into
an entertainment and marketing type device. Or at least is going to be quite
capable of such services if a user so desires to configure their system
accordingly.

Source: Various