EU Turns Up Heat On Microsoft

Going beyond Microsoft Corp.'s landmark settlement of U.S. antitrust charges, the European Union wants to force the software giant to offer computer makers a version of Windows without any multimedia program to give rival companies a better shot at getting their products on consumers' desktops, sources said Wednesday.

Such an order — expected this month barring a last-minute settlement — would be sure to be instantly challenged in European courts by Microsoft. The company insists removing its Media Player program would compromise other parts of its flagship operating system.

Taking out Media Player also could undermine Microsoft's long-term strategy of keeping Windows on top by incorporating new functions, which it argues benefits consumers.

Rivals from Netscape to RealNetworks have repeatedly challenged the practice as unfair competition.

European Commission spokeswoman Amelia Torres refused to comment on specific remedies being sought.

But, she said, "the draft decision contains clear remedies to the identified illegal conduct, remedies which will restore a competitive marketplace for consumers in Europe."

A Microsoft spokesman also declined to comment on details, repeating only the company is "working actively with the European Commission toward an amicable settlement of this case."

The EU has already made a preliminary finding that Microsoft violated EU competition law by bundling its multimedia software into Windows, and by failing to provide competitors in the server market with enough programming code to allow their products to operate as well with Windows as Microsoft's own.

To resolve the first abuse, the draft decision sent to national regulators for review last month would require Microsoft to offer computer manufacturers two versions of Windows: one with Media Player and one without, according to sources familiar with the case, speaking on condition of anonymity.

The Commission, which conducted extensive market surveys a year ago, believes many manufacturers — and content providers — are uncomfortable relying solely on Microsoft and so rivals such as RealNetworks' RealOne player and Apple's QuickTime would get a better shot.

Microsoft could keep its Media Player in Windows products sold directly to European consumers, avoiding the difficulty of having to police what version is sold where.

Yet although the order would apply only to computers sold in Europe, Competition Commissioner Mario Monti sees the market as big enough to affect Microsoft's behavior worldwide.

Microsoft has said it is certain to appeal any ruling against it.

It has sought to interest the Commission in a solution where it includes rival players on a CD-ROM packaged with Windows that consumers could install if they wanted — a solution rejected by the Commission as placing too much burden on consumers.

It also argued the EU's concerns were addressed by the 2001 U.S. settlement.

Microsoft was ordered then to come up with a way to hide access to its software — such as the Internet Explorer Web browser, Windows Media Player and Windows Messenger — and allow users to choose non-Microsoft products.

As evidence that that is working, Microsoft points to an alliance announced in January between Hewlett-Packard Co. and Apple Computer Inc., under which HP will bury Microsoft's Media Player and pre-install Apple's iTunes as the default music player with every HP computer beginning this summer.

It also says that going further would interfere with the smooth operation of Windows as a whole.

During a closed-door hearing last fall in Brussels, company lawyers argued that the underlying software code for Media Player is also needed for things like the help function, screensaver and the "ping" a computer makes when an email arrives.

Yet contentions that nothing could be removed from XP may have been undermined by news last month that Microsoft was developing a cheaper, slimmer version of Windows for the Thai government's low-cost PC program.

Microsoft Thailand Managing Director Andrew McBean told the The Bangkok Post that the entry-level version of Windows XP will contain less capabilities than regular editions.