For Microsoft Corp. (MSFT
), the finish line appeared to be within sight. The five-year-old antitrust battles in Washington came to an end last year with a ruling that barely rapped the software giant on the knuckles. And in the sprawling Eurocracy in Brussels, word had it that Europe's competition commissioner, Mario Monti, was just weeks away from resolving Europe's three-year-old antitrust tussle with Microsoft. But any illusions of a speedy wrap-up ended in late January with a resounding thump. That was the sound of a new complaint against Microsoft landing on Monti's desk.
More? Yes, and for a powerful reason. A grouping of Microsoft's rivals, including Sun Microsystems (SUNW
), AOL Time Warner (AOL
), Nokia (NOK
), and Oracle (ORCL
), are angling with this new complaint to push Monti toward a much sterner ruling. They argue that Microsoft, now more than ever, is using its Windows monopoly to establish dominance in other markets, from instant messaging to digital moviemaking software. And to resolve this, they want Monti to force Microsoft to tear out the applications, stripping Windows down to the bare essentials. "These [other] markets are under threat," says Ed Black, president of the Washington-based industry group leveling the complaint, the Computer and Communications Industry Assn. "For us to wait for all these markets to be destroyed is absolutely ridiculous."
For Microsoft, the prospect of tearing apart Windows is anathema. Much of the company's PC strategy, and the very basis of its popular Windows XP operating system, is to provide users with a host of seamless applications. And when U.S. District Judge Colleen Kollar-Kotelly upheld the company's settlement with the U.S. Justice Dept., an exultant Chairman William H. Gates III said that the deal permitted Microsoft to add new features to Windows. "It gives us the freedom to innovate, which we've said is a very central thing."
It's precisely that freedom that competitors want to limit. And Monti's division, with its ongoing case against Microsoft, is the logical venue. With his vast powers that extend across the entire European market, Monti has the clout to humble even a giant. For three years the commissioner and his staff have been developing an antitrust case against Microsoft based largely on the bundling of Microsoft's Media Player into the Windows 98 operating system. The new complaint, focused on Windows XP, is technically unrelated to the ongoing case. But the plaintiffs, say Brussels insiders, are hoping it will tip the balance against the company. "It could provide a new stick with which the commission can beat Microsoft," says Jacques Bourgeois, an antitrust lawyer at the Brussels office of Akin Gump.
Microsoft, says a spokesman, views the new charges as "tired and old arguments." But if they lead Monti to consider unbundling, Microsoft is sure to battle with Darwinian fury. By comparison, Monti's other remedies look mild. One alternative would be to force Microsoft to release more technical information to rivals about Windows, giving them a better chance to design competitive programs. Monti could also fine the company as much as 10% of annual revenue, or $2.8 billion.
Wherever he takes the case, Monti is treading new ground. Relevant case law in Europe is scarce. But one precedent is clear: In Europe's Microsoft case, the complaints keep coming.
By Jay Greene in Seattle, Andy Reinhardt in Paris, and Mike France in New York
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