Brussels faces tough call after Microsoft probe

  • 2003-11-20
  • By Michael Thurston, AFP
Brussels - The European Commission enters the final straight of a marathon antitrust probe into Microsoft this week, which could force the U.S. giant to make fundamental changes to how it markets its Windows software.

But the EU competition watchdog faces an achingly tough choice in the coming months: either impose sanctions and face possibly years of legal challenges, or propose a compromise likely to face stiff opposition from chief executive Bill Gates' rivals.
EU competition chief Mario Monti will already have started digesting the results of last week's closed-door hearings at which Gates' highly paid lawyers put his final arguments as to why the U.S. company has not unfairly squashed rivals.
Microsoft was upbeat after the hearings ended on the night of Nov. 14, calling them a "positive step toward a meaningful solution," adding "in some areas we have identified opportunities to narrow the differences between us."
"This is an ongoing process. Moving forward, Microsoft is committed to applying the energy and creativity needed to achieve a constructive outcome," the company said.
But Monti - whose previous conquests include such titans as General Electric's Jack Welch in his attempt to merge with Honeywell - may think otherwise, according to Gates' rivals.
"Microsoft's arguments sounded superficially good, but we punctured their balloon very thoroughly," said one key rival representative emerging from the very building where Monti felled Welch in 2001.
"They are going to lose a very major case. They are massively violating the law," he said.
A final decision by the commission is unlikely before early 2004, sources say, but one can be sure that Monti will already be at work in his Brussels bunker.
Alternatively there is a small possibility that Brussels could propose settlement talks to seek a compromise. Rivals, however, warn that this would be a let-off for Gates, who secured a settlement with the U.S. Justice Department in November 2001 that was condemned by other firms as inadequate.
But in Europe Microsoft could face upwards of $3 billion in fines and be forced to make substantial changes to how it markets its Windows operating system if found guilty of using its dominance to crush rivals.
The software titan is accused of abusing the dominance of Windows - installed in 90 percent of all personal computers - to fend off competing applications.
The EU hearings revolved around charges that Microsoft has tried to squelch rival products to its Windows Media Player, such as RealPlayer and Apple QuickTime.
And it stands accused of trying to squeeze out other firms in the market for "low-end servers" - computers that provide e-mail and other services to multiple users.
The online media market is seen as one of the crucial growth areas that will shape the computer industry for years to come, as more and more users venture into cyberspace to listen to music or watch films.
Control of the servers that provide such services would give Microsoft extraordinary additional clout to dictate terms to PC manufacturers.