Europeans Unmoved by U.S. Settlement With Microsoft

taken without permission from ny times

http://www.nytimes.com/2001/11/06/technology/06EURO.html

November 6, 2001

By PAUL MELLER

RUSSELS, Nov. 5 — Microsoft (news/quote) is no nearer to resolving its antitrust problems in Europe than it was before Friday's proposed settlement with the United States Justice Department, a spokeswoman at the European Commission here said today.

"We will be studying the settlement with interest, but we can't say what implications it will have on the European antitrust case yet," said the commission's competition spokeswoman, Amelia Torres.

The European case against Microsoft is "legally and factually different" from the case in the United States, Ms. Torres said. "Our investigation continues and is at an early stage."

At the end of August, the European Commission, the day-to-day executive agency of the European Union, combined two separate antitrust investigations of Microsoft's Windows operating systems, and added new accusations that by bundling its Windows Media Player music and video streaming software with Windows 2000, the company was again abusing a dominant market position.

Microsoft will make a written response to the enlarged European case in the coming days, and is expected to request a hearing with European Union competition regulators on Dec. 20 or 21.

Microsoft's president and chief executive, Steven A. Ballmer, said at a news conference on Friday that he wanted to reach a settlement in the European case, too. "We're engaged in a process with the European Commission and as we have wanted to settle this matter," Mr. Ballmer said of the case in the United States, "so would we like to appropriately settle the matter with the European Commission."

His comments appeared to signal a change in Microsoft's approach. Two months ago, John Frank, the company's senior corporate lawyer in Europe, said Microsoft "is not contemplating settlement discussions at this time." Mr. Frank was not available to comment on Monday.

Ms. Torres said that the commission did not expect Microsoft to volunteer to address all its concerns, adding, though: "If they got back and said they want to sort this out, we would be delighted. But you'd expect them to dispute at least some of the commission's objections."

The European authorities said in August that Microsoft might have violated their antitrust rules by using illegal practices to extend its dominant position in the market for personal computer operating systems into the market for low- end server operating systems. Low-end, or work group servers, are used by corporate departments or small businesses to connect PC's with shared printers, shared files and Web servers.

Microsoft has amassed almost 60 percent of this market, according to the Computer and Communications Industry Association, an industry group based in Washington. Its rivals there include Sun Microsystems (news/quote), Novell and the Linux operating system, but none has a market share anywhere approaching Microsoft's.

The addition of the bundling accusation involving Media Player to the European case bears a resemblance to the charges originally brought by the Justice Department that Microsoft bundled its Internet Explorer Web browser illegally with the Windows system.

But a European Union official, who spoke in exchange for anonymity, said there has been no cooperation between the authorities in the United States and in Europe. "In merger rulings there is closer cooperation," the official said, "but with antitrust, there are limits to the amount of cooperation."

In 1994, the European Commission and the Justice Department jointly forced Microsoft to abandon its licensing agreements with personal computer makers that had forced them to pay a royalty on every PC, whether or not it had Microsoft software preinstalled.

The European Commission hailed the outcome then as a model of how to tackle giant companies.

There is less common ground between the competition regulators this time, the official said, adding, "There is less overlap in the cases and there seems to be a greater distance between the regulators themselves than there was in 1994."