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EU: European Commission Gives Microsoft 'Last Chance' Warning

The European Commission yesterday gave Microsoft what it said was a "last chance" to respond to the findings of an antitrust probe which suggest the software giant is flouting EU competition rules and has gained an unfair market advantage over its rivals. Commission representatives said evidence of misconduct is overwhelming, warning that unless Microsoft actively seeks to remedy the situation, fines and forced software changes are inevitable.

Brussels, 7 August 2003 (RFE/RL) -- The European Commission yesterday indicated it is resolved to finally bring to a close its nearly four-year-long investigation into alleged market abuses by Microsoft.

In a statement released yesterday in Brussels, the commission says it has issued a "statement of objections," which details the charges and gives the software giant "one final opportunity" to respond and suggest remedies.

Commission spokesman Tilman Lueder said yesterday that Microsoft is accused of unfairly impeding competition by concealing its server code -- the software that enables desktop computers and other network servers to communicate with one another. Without full access to Microsoft's code, other operating systems cannot guarantee full interoperability with the dominant Microsoft networks. Companies therefore often find it easier to buy Microsoft's operating systems rather than experiment with integrating rival products into their Microsoft-dominated networks.

Another controversial aspect of Microsoft's practice is "bundling" its Media Player -- a program for playing audio and video clips -- with its Windows operating system. The commission says this gives the Media Player an unfair advantage over rival products.

Lueder said yesterday the commission has now "meticulously" updated all of its earlier findings, substantiating them by means of a representative market survey of Microsoft users. "It [the survey] considerably substantiates these allegations because what we have done, we have undertaken an extensive market survey involving approximately 200 users, content providers, and other customers of Microsoft products, Microsoft operating systems, Microsoft workgroup server systems. The population that is covered by this survey amounts to 1.2 million PCs," he said.

Microsoft now has a month to formally respond to the commission's allegations. If Microsoft does not respond, or if its response is deemed unsatisfactory, the commission says it could impose a fine on the company. It would then also force Microsoft to reveal its server code and "unbundle" the Media Player from the Windows operating system.

In the past, a number of the commission's antitrust actions have been reversed by courts. This time, Lueder said, the commission is confident its file on Microsoft will withstand any scrutiny. "This is a perfect opportunity to show that we are serious, that we think that we have now a very strong case, and I would almost say that the case as it stands now is too strong to ignore for the company at issue," he said.

Lueder did not say how big an eventual fine could be. He said that unlike the United States, the EU does not base corporate fines on turnover figures or alleged cost of misconduct. Instead, a fine is determined as a "function of the gravity of abuse and its duration."

The EU investigation parallels the findings of a U.S. inquiry two years ago, when Microsoft was found guilty of market abuses, although no fines were imposed. The EU is anxious to differentiate that case from the one it is pursuing, but Lueder said both the EU and U.S. authorities aim at restoring proper conditions for fair competition in the marketplace. Therefore, he said, the EU does not believe its case will affect trans-Atlantic ties in any way.

Lueder yesterday acknowledged that the case could still drag on for some time, especially if Microsoft should elect to take the commission to court. But he said a final decision is now a matter of "months, not years."

In May 2002, EU Competition Commissioner Mario Monti said the probe against Microsoft would be wrapped up by the end of that year.