Ballmer and The EU: Business as Usual?

Microsoft CEO Steve Ballmer will meet with Microsoft Competition Commissioner Neelie Kroes on Wednesday. There’s plenty still on Microsoft’s to-do list when it comes to complying with the Commission’s antitrust penalties against the software maker. But Ballmer’s best strategy may be to stall.

“If I had to bet, I’d bet they don’t settle this prior to the appeals court ruling,” said Melissa Maxman, a partner in the antitrust group of the law firm Baker & Hostetler. Maxman has represented European plaintiffs in antitrust cases in the United States and and the EU.

Maxman said she always advises clients to go to the government and work things out in antitrust matters especially. But in this particular case, time is on Microsoft’s side. The longer it can stall, the less time there will be until its next Windows iteration, Vista, begins to replace Windows XP in the marketplace.

“If I were Microsoft,” Maxman said, “unless the EU is willing to dramatically soften its position, I see no reason why they should reach a settlement now.”

A Microsoft spokeswoman said the October 5 meeting was part of the company’s ongoing communications with the Competition Commission of the European Union.

“Microsoft maintains a regular dialogue with the European Commission on a wide range of policy issues, including competition,” she said. “We cannot comment on the specifics of the meeting, other than to say that this meeting is part of that regular dialogue.”

The commission fined Microsoft a record $613 million after it found the company controlled a “virtual monopoly” with its Windows operating system, breaking European antitrust law governing competition. Microsoft appealed the decision to the European Court of First Instance; the appeals court declined to suspend enforcement of the penalties. Its final ruling on the appeal could arrive as late as 2010.

When Ballmer met with Kroes in April, Kroes, who took over the job of Competition Commissioner from Mario Monti in November 2004, pressed Ballmer about the company’s tardiness in offering server APIs that would let competitors’ products work with Windows, as well as in unbundling Windows Media Player from the operating system.

In June, Microsoft released to manufacturing home and professional versions of Windows XP N, a version of the operating system that didn’t include the media player.

Last month, Kroes said she was considering new charges against Microsoft, based on complaints from competitors.

But Maxman said that in an increasingly global economy, the EU must to some extent respect the previous decision by the U.S. in its own antitrust case against Microsoft.

Maxman said that Microsoft will benefit from having been given a pass by the U.S. Department of Justice. “I think Microsoft figures, ‘We’re an American company, and the American government has blessed what we’re doing.’ Basically, it will be very hard to enforce anything in a global economy when one superpower — the EU — says something is bad, and another superpower — the U.S. — says it’s okay.”