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Microsoft Foes Fight On Second Front

A coalition of computer, telephone and Internet companies announced a new offensive Tuesday in their battle against Microsoft Corp., accusing it of violating European antitrust law with its new Windows XP.

The Washington-based Computer & Communications Association said it filed a formal, confidential complaint Jan. 31 with the European Commission, which enforces EU competition laws.

Tiffany Steckler, a Microsoft spokeswoman at the company's European headquarters in Paris, declined to comment directly on the complaint. She said some of the issues raised "appeared" to be addressed in U.S. litigation, but added "it's up to the European Commission to decide."

A Commission spokeswoman said the new complaint would be examined, but stressed it would not affect another investigation that has been under way for more than three years into Microsoft, which officials hope to wrap up in the coming months.

"I do not expect it will be delaying our conclusion of the ongoing complaint," said EU spokeswoman Amelia Torres. Competition Commissioner Mario Monti said in December he expects to close the case in the "first part" of 2003.

Torres refused to elaborate, but sources said the commission staff have yet to present their draft recommendation to Monti, who then plans to submit it to a newly created "devil's advocate" panel for review.

Microsoft, which has made no bones about its desire to settle the case, also has yet to make its final presentation, although Steckler said information is exchanged "all the time."

In that case, EU investigators accuse Microsoft of abusing its dominance of the market for PC operating systems — its ubiquitous Windows software — to muscle its way into related markets for media and server software.

The new complaint focuses on Windows XP, the latest Microsoft operating system, which was released at the end of 2001.

"Windows XP takes Microsoft's abusive practices to a new level, illegally protecting Microsoft's existing monopolies and ... illegally eliminating competition in new software and service markets," it said.

In the 260-page complaint, the group charges that:

  • the program's user interface is biased toward Microsoft's own software, making life difficult for competing products.
  • that Microsoft is refusing to fully disclose document formats for its Office suite of applications.
  • that Microsoft is imposing proprietary technologies and abusive licensing to shut out competing products.
  • that it is leveraging its dominant positions in old markets, such as e-mail, and new ones such as handheld computing devices and smart phone software.

    "Only competitive markets can deliver choice, innovation and fair prices for consumers," said Ed Black, president and chief executive of the CCIA. "It is therefore imperative to take steps to preserve competition in these and related markets."

    The CCIA's members include America Online, Kodak, Sun Microsystems, Nokia, UPS, Yahoo, Casio, Verizon and Fujitsu.

    Microsoft argues that its settlement with U.S. authorities last year, combined with additional steps it has taken voluntarily, should be enough to answer the European challenge. It fears regulators will demand it remove integrated components from its Windows system, such as the Media Player.

    The commission has no authority to break up Microsoft or order divestitures, but it can fine the company up to 10 percent of its worldwide sales — potentially an enormous sum for a company that earns more than US$30 billion annually.

    The CCIA joined the earlier EU case as an interested third-party, but argued that new "abuse" since the introduction of Windows XP made the new complaint necessary.

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