EC Gets Tough on Microsoft

Stricter disclosure, unbundling sought.

Taking a tougher stance on Microsoft Corp.s use of its market power than their counterparts in the United States, officials in Europe are proposing remedies for alleged anti-competitive behavior that include greater interface disclosure requirements and the unbundling of Windows Media Player.

The European Commission said last week it has evidence that shows Microsoft uses a dominant position in the PC market as an advantage in the low-end server market. And by tying Media Player to Windows, the EC said, the Redmond, Wash., company is weakening competition, stifling product innovation and reducing consumer choice.

Potential remedies proposed by the EC include interface disclosure requirements that would allow server rivals to fully interoperate with Windows products. To remedy what the EC calls the "tying" problem, Microsoft would have to either provide a version of Windows without Media Player or provide rival media players with Windows.

If Europe succeeds in imposing its tougher proposals, they would likely affect the U.S. market as well, industry observers said.

Microsoft "could unbundle Windows Media Player in Europe and bundle it in the United States, but I dont think theyre likely to market two versions," said Ken Wasch, president of the Software & Information Industry Association, in Washington. "And if theyre going to disclose more interfaces in Europe, its going to filter back to the U.S."

Microsoft is reviewing the ECs objections, said company spokesman Jim Desler.

"We will not speculate on possible outcomes or the suggested remedies and will continue to focus on responding to the commissions concerns," Desler said. "Microsoft takes this investigation very seriously."

Depending on Microsofts reaction to the objections and remedy proposals, the commission can impose a fine of up to 10 percent of the companys annual sales, said Wilfried Schneider, spokesman for the EC, in Washington. "If they would comply with the proposals, there would be no fine, obviously," Schneider said. "If they implement the remedies that the commission wants them to, then theres no fine."