MS ANTITRUST : Rivals fear EU ruling may be narrow

As the European Union wraps up its antitrust investigation into Microsoft Corp., competitors fear that the European Commission may issue a ruling that fails to prevent future abuses by the software maker.

One of the main issues in the case that Microsoft and the Commission are farthest apart on is the bundling of Media Player in the Windows operating system. The Commission, which among other things oversees EU competition regulation, believes that this form of bundling gives Media Player an unfair advantage over competitors. Microsoft has said it is unwilling to take the video and audio player out of Windows.

Microsoft competitors want the European competition regulator to word its ruling in such a way that it applies to the bundling of other middleware products.

“If the EC rules that Microsoft should unbundle Media Player, I don’t see Microsoft voluntarily unbundling other middleware from the operating system,” said Thomas Vinje, a competition lawyer in the Brussels office of law firm Morrison & Foerster LLP, which has represented some Microsoft competitors.

The Commission might tightly word its ruling on the Microsoft case to specific issues such as the Media Player question to avoid any potential appeal by Microsoft on grounds that the ruling goes beyond the specific accusation made by the Commission, Vinje said.

“If they do that, it leaves us in a situation where we will have to file new complaints about other products bundled into Microsoft’s operating system,” Vinje said, adding “in which case it begs the question whether competition law is relevant to such a fast-moving industry.”

Other industry sources have also questioned the real impact a European ruling against Microsoft would have.

“If they tackle the problems product by product, then Microsoft will in the future weigh up the potential antitrust fines against sales and they’ll probably decide it’s worth bundling products into Windows because it takes the Commission so long to react,” said one person from a rival company who requested anonymity.

Toward the end of last year the Commission said it would still consider another offer of a settlement from Microsoft before it closed the case. Microsoft is believed to be close to submitting a final attempt at a settlement. Neither the company nor the Commission would comment on that.

The EU antitrust case has focused on whether Microsoft is leveraging its dominance in operating systems to thwart competition in related markets and is the result of two separate antitrust investigations into the software maker. The first case was sparked by a 1998 complaint from Sun Microsystems Inc., alleging that Microsoft was using its Windows operating system software to muscle rivals out of the market for server software.

In February 2000, the Commission launched a separate investigation on its own initiative to see if Microsoft was doing the same thing with the latest version of its operating system, Windows 2000. In August 2001, the EU regulator announced that it was merging the two cases because they were so similar.