Microsoft antitrust probe to confirm guilty verdict

6 Aug 2003

The European Commission is about to complete its antitrust probe into Microsoft, which will confirm that the company abused its dominant market position. The Commission has given the software giant a final opportunity to comment before the process is concluded.

Having gathered further evidence from a number of sources, including Microsoft customers, suppliers and competitors, the Commission has confirmed its earlier finding that Microsoft was abusing its dominant position in the market and its preliminary conclusion is that the world’s largest software provider is continuing to do so.

In a statement, the Commission referred to Microsoft’s influence from the PC into low-end servers and added that Microsoft’s tying of Windows Media Player to its Windows PC operating system “weakens competition on the merits, stifles product innovation, and ultimately reduces consumer choice”.

Microsoft has been invited to submit a final Statement of Objections – comments on the remedies that will be imposed to put a stop to the software company’s antitrust infringements. Competition Commissioner Mario Monti said: “This Statement of Objections, which includes the identification of appropriate remedies, gives Microsoft a last opportunity to comment before the Commission concludes the case. We are determined to ensure that the final outcome of this case is to the benefit of innovation and consumers alike.”

In gathering its evidence, the Commission contacted a significant number of small, medium and large enterprises across all industrial sectors throughout Europe, requesting information on whether interoperability considerations were a factor in their purchasing choices, and whether non-disclosures of such information by Microsoft influenced their purchasing decisions.

When asked, an “overwhelming majority” declared that Microsoft’s non-disclosure of interface information – which is necessary for competing servers to “talk” with Windows PCs and servers – artificially altered their choice in favour of Microsoft’s server products. The Commission declared such behaviour as detrimental to competition.

Other findings sourced from content providers and software developers confirmed that the ubiquity of Windows Media Player on PCs artificially skews development incentives in favour of the Microsoft platform.

To correct the antitrust situation, the Commission has provisionally identified the core disclosure obligations which Microsoft must meet so that competitors in the low-end server market can achieve full interoperability with Windows PCs and servers. Microsoft would be obliged to reveal the necessary interface information so that rival vendors of low-end servers are able to compete on a level playing-field with Microsoft.

The Commission has outlined two alternative proposed remedies to address the issue of tying. The first would be the untying of Windows Media Player from Windows, whereby Microsoft would be required to offer a version of Windows without Windows Media Player included. This is the standard remedy for a tying infringement. The second would be a “must-carry” provision, whereby Microsoft would be obliged to offer competing media players with Windows.

By Gordon Smith