Microsoft: Rival Browsers May Ship in Windows 7

IE, the EU and Microsoft

The darkness of the tunnel that has been Microsoft’s long-running antitrust battle with the European Commission (EC) may finally see a point of light at the end.

While it might not have been Microsoft’s (NASDAQ: MSFT) first choice, the software giant has offered to ship releases of Windows 7 in Europe with a feature that enables users to choose a competing Web browser to Microsoft’s own.

The feature would include a so-called “ballot screen” that would let PC users choose from a variety of Web browsers when they initially set up a new PC. If the user chooses a different browser than Internet Explorer 8, it would also disable IE8.

PC manufacturers would also have the right to install whatever browsers they choose on new PCs, including IE8.

“If this proposal is ultimately accepted, Microsoft will ship Windows in Europe with the full functionality available in the rest of the world,” said a statement by Brad Smith, Microsoft general counsel,
on the company’s Web site Friday.

A statement by the competition directorate for the EC — the European Union’s (EU) executive branch — seemed favorably disposed toward the offer.

“The Commission welcomes this proposal, and will now investigate its practical effectiveness in terms of ensuring genuine consumer choice,” the statement said.

Microsoft has been under fire from the EC for years on various anti-competition accusations. Before this, the most expensive one charged Microsoft with wrongfully forcing PC makers to ship Windows bundled with its media player and with withholding interoperability information from competitors.

Microsoft appealed the EC’s decision against it and lost, and in the meantime, dragged its feet on compliance, a move that ultimately may cost the company $2 billion or more. Part of that fine is still under appeal.

The browser case resulted from Norway-based Opera filing a complaint with the EC in 2007 that, through bundling IE with Windows going back to 1996, Microsoft was illegally blocking browser competitors in the EU.

The EC conducted an investigation and served Microsoft notice in January that it intended to force Microsoft to offer other browsers with Windows if it found the company guilty of anti-competitive practices again. In June, Microsoft announced it would only ship Windows 7 in EU countries without IE8 or any other browser. Those editions would be marked Windows 7E.

EC brass discounted Microsoft’s offer at the time, criticizing the move as removing, not adding, choice.

Since then there has been word that the two parties were in quiet negotiations. Given the strident tone of earlier EC statements, the tenor of Friday’s statement appeared decidedly positive toward the company’s proposal.

Since Microsoft had already been gearing up to ship Windows 7E products in Europe at the same time that Windows 7 will be released for sale in October, it would continue to ready those IE-less packages until the new proposal is accepted.

“We currently are providing PC manufacturers in Europe with ‘E’ versions of Windows 7, which we believe are fully compliant with European law,” Smith said in his statement. “PCs manufacturers building machines for the European market will continue to be required to ship E versions of Windows 7 until such time that the Commission fully reviews our proposals and determines whether they satisfy our obligations under European law.”

The proposal would also call for Microsoft to publicly provide interoperability information to competitors for leading Microsoft IT products like Windows Server, Office, Exchange, and SharePoint, as well as for Windows.

“Microsoft realizes they don’t want to get into another fight with the EC with all the fines and penalties,” Matt Rosoff, research vice president for corporate affairs at Directions on Microsoft, told

But given that Microsoft’s proposal echoes what the EC had earlier said it might demand, will that help keep any pending financial penalties down?

“Maybe, maybe not — they may get a fine for past behavior,” Rosoff said, saying Microsoft is over a barrel, to some extent. “With their profits under pressure, they have to do anything they can to avoid any more fines.”

The EC has not said when it will ultimately decide the company’s case. However, it’s expected to come before the end of the year.

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