Wednesday, 16 December 2009

EU slaps Microsoft, again

If you buy a new PC in Europe next year, you’re going to see an unfamiliar little pop-up window the first time you boot up, asking you which internet browser you would like to set as the default. Believe it or not, that pop-up is the result of a bitter ten-year legal battle that was finally resolved this week.

The EU has been involved in anti-trust charges against Microsoft for years, alleging that the company has operated as a monopoly in various ways. It was the weak regulatory system in the United States that allowed this to happen in the first place, but over the last decade the EU’s competition regulator has become increasingly assertive, and today it is widely acknowledged as the world’s regulatory body.

This specific dispute centred on the fact that since the vast majority of PCs use the windows operating system, the vast majority of computer users were using internet explorer as their web browser simply because it was presented as the only option with the system – even though it isn’t. IE is used by about 56% of internet traffic. This issue is just one of many complaints against Microsoft launched by the EU. Microsoft has paid €1.7 billion in fines to the EU so far.

The new rules will only apply to computers sold in Europe, and it remains to be seen whether Microsoft will adopt the practice globally. The EU is now the world’s largest advanced market (far larger than the US), and as its competition regulator has grown more assertive (and in the face of little regulation in the US), its rulings now often effect corporate practice in the entire world. It may simply be easier for Microsoft to offer the pop-up with all its products rather than having to specifically make a separate version of windows for Europe that would include the pop-up.

This is a significant victory for outgoing competition commissioner Neelie Kroes, who has become an unexpected regulatory champion over the past five years. On 1 January Kroes will move to the Digital Agenda department, to be replaced by Spanish Socialist Joaquin Almunia. Almunia will likely continue Kroes’s tough stance and may go after US companies even more aggressively.

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