Windows’ IE Integration in the Crosshairs Again

Microsoft’s lawyers are busy prepping for a hearing to argue that the European Commission (EC) shouldn’t punish them for bundling Internet Explorer (IE) with Windows since the mid-1990s.

In the meantime, some Microsoft (NASDAQ: MSFT) competitors are taking the opportunity to speak out against the company and its browser behaviors once again.

The company’s legal team provided its written response to the EC’s “Statement of Objections” (SO) last week, after requesting and getting a one week extension to file. At Microsoft’s request, the EC also scheduled a hearing for June 3 to 5 during which Microsoft can present its arguments orally if it chooses. Microsoft has not yet decided whether it will use the hearing, according to a company spokesperson.

This week’s hoopla over the debut of the Windows 7 Release Candidate, however, provided an opportunity to push for more European regulation of the software giant.

In fact, release of the RC triggered browser competitors Opera Software and Mozilla to publicly complain that they believe Microsoft is still abusing its dominant position to favor IE, according to a report in the Financial Times on Thursday.

That was not unexpected, despite attempts Microsoft has made to soften some of the criticism since the case began.

Some of the rumblings were apparently in reference to the way that Microsoft automatic updates default to installing IE8, which shipped in late March, if the user chooses “express install.”

“We’re concerned, of course, and continue to investigate. Using the Windows Update channel to update Internet Explorer in any way that undermines user choices is a clear example of how Microsoft uses its monopoly position to damage competition in related products,” Mitchell Baker, chairperson of Mozilla Corp., said in an e-mailed statement to

A representative for Oslo, Norway-based Opera did not respond to a call and an e-mail by press time.

However, a Microsoft spokesperson said the complaint made in the Financial Times article mischaracterizes the issue.

“Essentially, when a user downloads Internet Explorer 8 for the first time, there is the option to use Express Settings, and in this instance, Internet Explorer 8 is checked as your default browser — This is the same as other major browsers,” the spokesperson said in an e-mail to

“Internet Explorer 8 makes it very clear for the user to make the decision,” the spokesperson added.

Microsoft, though, has touted other changes it claims have made that favor user choice and level the playing field for other browsers.

For instance, Microsoft added the ability to disable IE8 in Windows 7, as well as other Windows components such as Windows Media Player. Additionally, when a Vista user upgrades to Windows 7, it will keep the user’s default browser. If a clean installation is required — such as installing the final Windows 7 over the beta or other test copies of Windows 7 — that will default to IE8 so the user will have to reinstall his or her browser of choice, according to Microsoft.

Microsoft is also expected to argue that, given serious competition from Mozilla’s Firefox and Apple’s (NASDAQ: AAPL) Safari, IE is still losing browser market share, not gaining it. The latest figures from Web metrics firm Net Applications show Microsoft with 66 percent market share on a global basis, with Firefox at 22.5 percent and Safari at 8 percent.

Given the EC’s previous decisions, though, that will likely not be enough to sway competition regulators.

While the company is putting on its best cordial face, moves like making it easy for users to switch off IE, and warnings to shareholders show it may be resigned to its fate and is doing its best to make the whole problem go away. In fact, Microsoft has also warned shareholders that it may have to pay some percentage of its worldwide Windows profits to the EC as a fine, should the software giant not prevail in its current defense.

At the same time, however, the company is also appealing a $1.35 billion fine that the EC imposed on Microsoft last year, so clearly the company is not a pushover.

The company has warned shareholders that it, and PC OEMs, may have to offer Windows 7 machines without a default browser, but with a set of competing browsers to pick from. One idea would be to force users to choose which browser they want to use when they set up the PC for the first time.

Opera filed the current complaint with the EC’s competition directorate in December 2007. The EC sent Microsoft its “objections” in late January 2009. Mozilla recently joined the case as an interested third party, along with the European Committee for Interoperable Systems (ECIS), which includes long-time Microsoft gadfly IBM (NYSE: IBM). Google (NASDAQ: GOOG), maker of the Android browser, also recently joined as an interested party.

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