Microsoft faces new antitrust probe from European Commission

The European Commission has launched a new case against Microsoft over claims that it is using its market dominance to stifle competition. The Commission is basing its arguments on a crucial court victory over Microsoft last year.

The case will investigate two claims: that Microsoft has refused to disclose information about its software's interoperability with other software and whether the inclusion of the Internet Explorer browser with its Windows operating system is illegal.

The Commission fined Microsoft in 2004 for similar offences, the failure to provide interoperability information and the bundling of a media player with Windows. That case took years to resolve, but a Court of First Instance judgment in September of last year backed the Commission in a decision that Microsoft did not appeal.

That court ruling has given the Commission the backing it needs for the new action. "In its Microsoft judgment of 17 September 2007, the Court of First Instance confirmed the principles that must be respected by dominant companies as regards interoperability disclosures," said a Microsoft statement. "As for the tying of separate software products, in its Microsoft judgment of 17 September 2007, the Court of First Instance confirmed the principles that must be respected by dominant companies."

Competition law expert Giles Warrington of Pinsent Masons, the law firm behind OUT-LAW.COM, said that the previous successful case against Microsoft is a crucial factor in the Commission's decision to take a new one.

"The allegations made in this case raise similar issues to those raised previously, supply of interoperability information and tying software to the Windows operating system," he said. "In addition, the Court judgment, and Microsoft's acceptance of it, is likely to embolden the Commission in investigating alleged abuses of dominance in the technology and technology-related fields."

In the Commission's previous case, Microsoft was eventually ordered to make available a version of Windows with no media player included because the automatic inclusion of the player was found to have distorted the market for media playing software. Similar arguments have been advanced about the inclusion of Internet Explorer.

The Commission's action on Explorer is the result of a complaint by small Norwegian browser company Opera. That company's chief executive Jon von Tetchzner last week told OUT-LAW Radio why his firm had taken on the software giant.

"Microsoft started by integrating Internet Explorer into Windows some time ago and as a monopoly in the operating system market Microsoft has to follow certain rules," he said. "By tying in Internet Explorer, they have limited competition in the market. I think this is part of normal antitrust laws; you can't tie items to a monopoly product."

Microsoft said that it intended to cooperate with the inquiry. "We will cooperate fully with the Commission’s investigation and provide any and all information necessary," said a company statement. "We are committed to ensuring that Microsoft is in full compliance with European law and our obligations as established by the European Court of First Instance in its September 2007 ruling."

The other branch of the investigation relates to the interoperability of Microsoft systems, including its widely used Office suite of software programs. That action arises from a complaint by the European Committee for Interoperable Systems, a trade body representing technology companies that lobbies for interoperability.

"In the complaint by ECIS, Microsoft is alleged to have illegally refused to disclose interoperability information across a broad range of products, including information related to its Office suite, a number of its server products, and also in relation to the so-called .NET Framework," said the Commission statement. "The Commission's examination will therefore focus on all these areas, including the question whether Microsoft's new file format Office Open XML, as implemented in Office, is sufficiently interoperable with competitors' products."

Warrington said that the action is part of a pattern, that the Commission has been emboldened by its September court victory.

"Shortly after the publication of the Court's judgement in the Microsoft case, the Commission announced that it had commenced a formal investigation into allegations that US chipset manufacturer Qualcomm had abused its dominant position by imposing unfair licensing terms and conditions for use of its IP rights," he said.

Warrington said that national competition authorities have also taken note of the trend. "It is also rumoured that the Office of Fair Trading has aspirations to bring a high-profile abuse of dominance case along the lines of the Microsoft case," he said. "Although this would not necessarily be in the technology field, it is clear that the licensing of technology by companies with strong market positions is currently something of a hot topic for competition authorities."

Opera's von Tetchzner said that his small company took on Microsoft because it felt that the issues were too important and had to be acted on.

"Someone has to do it, right? I do believe the internet is just such an extremely important place. You don't want it to be governed by one company and again you definitely don't want a company that is strong in one market to be able to just take this market as their as their own," he said. "I just think we want to make sure that the internet stays open and free and that is something we will work very actively for."