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Europe's nearly 18-month battle against the dominance of Microsoft's (Nasdaq: MSFT) Internet Explorer has entered a new stage.
The EC has rejected Microsoft's offer to strip Internet Explorer from some copies of Windows 7 destined to ship to the EU when the new operating system is released in the fall.
Instead, the commission wants Microsoft to distribute Windows 7 with a variety of browsers so retailers and OEMs can decide which to use.
Could that suggestion be based on protectionism?
Eyeballing IE
Following a complaint by Norwegian browser maker Opera Software in December of 2007, the European Commission began looking into whether Microsoft had violated European Union (EU) antitrust regulations by bundling the Internet Explorer browser with its operating systems.
The commission is the EU's enforcement arm.
In January of this year, the commission delivered its preliminary opinion: that tying IE to Windows infringes Article 82 of the EC Treaty, which covers abuse of a dominant position. Since Windows is the dominant operating system and IE is the default browser in Windows, the reasoning goes, it unfairly hinders makers of alternative browsers like Opera, Mozilla and a host of others.
This harms competition between Web browsers, undermines product innovation, and reduces consumer choice, the commission said in its Statement of Objections.
As legal precedent, the statement refers to the EU's 2007 ruling against Microsoft over Windows Media Player, which was similarly tied to the Windows operating system.
Microsoft's Offer
After a Statement of Objections is filed, the next step is for both parties to make offers and counteroffers, and for the target party -- Microsoft, in this case -- to request an optional oral hearing.
After some to-ing and fro-ing between both parties, Microsoft last week told computer manufacturers and retailers that it would offer Internet Explorer separately to both manufacturers and users, said company vice president and deputy general counsel Dave Heiner.
"We're committed to making Windows 7 available in Europe at the same time as it launches in the rest of the world, but we also must comply with European competition law," Kevin Kutz, Microsoft's director of public affairs, told The E-Commerce Times.
Mozilla Foundation CEO John Lilly was not impressed by the offer.
"It's impossible to evaluate what this means unless and until Microsoft describes, completely and with specificity, all the incentives and disincentives applicable to Windows OEMs," he told the E-Commerce Times.
"Without that, it's impossible to tell if Microsoft is giving something with one hand and taking it away with the other. More to the point, it's impossible to tell whether this does anything more than change the technical installation process of the OEMs and make life more difficult for people upgrading to Windows 7," Lilly said.
Making Room
Opera prefers the EU's idea.
"Having multiple browsers has the potential of being an effective solution," Hakon Wium Lie, the vendor's chief technology officer, told the E-Commerce Times.
"Microsoft had a substandard browser and didn't do any updates between 2001 and 2006, but still maintained a dominant position," he said.
Opera is a small player in the desktop browser market. Wium acknowledged. However, "there isn't a market for other browsers, because Microsoft essentially gives their browser away by including it in the OS," he pointed out.
However, Opera is relatively strong in the mobile market, where Wium claims it has more of a market share than the iPhone's Safari browser.
Amicus Curiae
Opera's complaint was backed by several of Microsoft's major rivals, both in the browser market and in other markets. They included Google (Nasdaq: GOOG), Nokia (NYSE: NOK), the Mozilla Foundation and Sun Microsystems (Nasdaq: JAVA), although Sun later dropped out.
Google joined the fray in February after having launched its Chrome browser in September of 2008.
The search giant is joining in, due to Microsoft's dominance of the browser market and Google's having learned a lot from launching Chrome, according to Sundar Pichai, Google's vice president of product management.
In a blog posting on the topic in February, Mozilla Foundation Chairperson Mitchell Baker essentially said that Microsoft's business practices have come very close to eliminating competition, choice and innovation in the browser market. She also offered Mozilla's expertise to the EC in the case.
Solution Worse Than the Problem?
Microsoft's proposal to ship a browser-free OS didn't strike Gartner (NYSE: IT) distinguished analyst Martin Reynolds as realistic.
"If you're a manufacturer, you're not going to ship a computer without a browser -- that's stupid," he told The E-Commerce Times.
On the other hand, insisting that computers ship with multiple browsers seems to presume ignorance on the part of the buyer.
"So, the question is," according to Reynolds, "does the EU assume people in Europe are too stupid to go on the Web and download any other browser they want? You wonder how much of this is driven by protectionism -- Opera is a European firm."
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