European Union To Launch Microsoft Probe

As the U.S. government’s antitrust case against software giant Microsoft (Nasdaq: MSFT) wends its way through the legal system, the European Union (EU) announced today that it will launch its own antitrust probe.

The European probe will focus on potentially illegal bundling of server software with the Windows 2000 operating system, while the U.S. Department of Justice antitrust suit alleged that Microsoft illegally bundled its Internet Explorer browser with Windows 98.

The announcement surprised many observers, who had expected the more bureaucratic EU to back the finding of the U.S. courts in the highly publicized case against Microsoft.

Instead, Competition Commissioner Mario Monti said in a press conference today that the commission believes that the Windows 2000 system could violate EU antitrust rules by bundling the system with server software “in a way which permits only Microsoft products to be fully interoperable.”

The announcement comes just a week before Microsoft rolls out Windows 2000 in a worldwide launch. The company is planning a live event in San Francisco, California via satellite with company Chairman Bill Gates, and has scheduled launch parties in 63 U.S. cities and dozens of locations worldwide.

It is not yet clear how the EU probe might affect the distribution of the operating system to its member countries, many of which are leading technology and software consumers outside of the United States.

Windows 2000, the follow-up to the Windows 98 system, is aimed primarily at businesses. The Millennium edition is due out in the spring.

Microsoft officials were unavailable Wednesday morning to respond to the EU announcement.

Across the Atlantic

The news about the EU’s actions will not be welcomed by Microsoft, which has come out firing in recent weeks in its battle with the U.S. Department of Justice. Judge Thomas Penfield Jackson continues to weigh the facts before he issues his ruling, while Microsoft and government lawyers have been meeting in Chicago, Illinois to see if they can reach a settlement.

Those talks seem to have broken down, and both sides have stepped up the rhetoric as the legal battle plays out before the American public. Observers say that both sides have planted strategic leaks with the press to try and sway public opinion.

The Role of Public Opinion

Jackson will likely weigh public opinion as a factor in making his decision. His finding of fact made it clear that he considers Microsoft an abusive monopoly. The only real issue remaining is how punitive will his ruling be.

Reverting back to its combative style after toning it down leading up to Jackson’s finding of fact, Microsoft is trying hard to drum up public support. In addition to rallying industry insiders and lobbyists, the company has formed an initiative called “Freedom to Innovate,” which essentially decries government intervention into the free market system.

It invites visitors to its Web site to the page with a link termed “DOJ vs. Freedom to Innovate.”

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