Microsoft's Google EU Filing, Allen Tell-All Dominated Week

Microsoft's week saw an antitrust filing against Google in the EU, new Windows Phone numbers and excerpts from a tell-all by co-founder Paul Allen.

It was an irony so big that even Microsoft's general counsel had to acknowledge it: After spending years wrestling with antitrust investigations by the European Commission, Microsoft was turning to that very same regulatory body with a formal complaint about arch-rival Google's competitive practices.

"We're concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative," Brad Smith, Microsoft's senior vice president and general counsel, wrote in a March 30 statement posted on the Microsoft on the Issues blog. "We've therefore decided to join a large and growing number of companies registering their concerns about the European search market."

Smith's posting argued that Google restricts other search engines from properly cataloging YouTube videos in search results, that it prevents those YouTube videos from running well on Windows Phones, that it blocks access to book publishers' content, that it restricts advertisers' access to their own data.

Ratcheting up the rhetoric, he also accused Google of contractually blocking "leading Websites in Europe from distributing competing search boxes" and discriminating against competitors by raising the price for prominent placement in Google advertisements.

In the not-so-distant past, the European Commission pursued Microsoft over supposed anti-competitive practices related to Internet Explorer. Pressured by the body, Microsoft eventually released a "Web browser choice screen" designed to give Windows users in the European Union a selection of browsers other than IE.

"We're not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants," a Google spokesperson wrote in a March 31 email to eWEEK. "For our part, we continue to discuss the case with the European Commission and we're happy to explain to anyone how our business works."

By "one of their subsidiaries," the spokesperson is referring to Ciao! from Bing, an online-community portal aimed at a handful of Western European markets. In February 2010, the European Commission notified Google that Ciao, along with U.K. price-comparison Website Foundem and French legal search engine, had filed complaints about Google's effect on European search-engine competition. Foundem is a member of ICOMP, a lobbying group sponsored by Microsoft.

That wasn't Microsoft's only long-simmering feud this week. On March 30, Vanity Fair published an exclusive excerpt from Microsoft co-founder Paul Allen's upcoming memoir, titled "Idea Man," that details the company's early days. The book is attracting early buzz for scenes that depict both Bill Gates and Microsoft CEO Steve Ballmer in a somewhat negative light.

Allen co-founded Microsoft with Gates in 1975, after the two decided to develop a programming language, Altair BASIC, which would run on the MITS Altair 8800. Microsoft's Website calls Altair BASIC "the first computer language program written for a personal computer." Allen describes the eighth-grade Bill Gates as "all arms and legs and nervous energy," capable even at that age of enormous concentration and competitiveness.

However, Allen describes friction starting to develop between the two future moguls, not only over the minutiae of starting a company, but also their baby's ultimate direction. Perhaps most controversially, however, Allen suggests Gates and Ballmer-whom he describes as resembling "an operative for the N.K.V.D.," the Soviet agency responsible for Gulags and mass executions-jockeyed to reduce his stock holdings in the company.

"One evening in late December 1982," he wrote, "I heard Bill and Steve speaking heatedly in Bill's office and paused outside to listen in. It was easy to get the gist of the conversation. They were bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity by issuing options to themselves and other shareholders."

Allen apparently drove home after that. "I helped start the company and was still an active member of management, though limited by my [cancer], and now my partner and my colleague were scheming to rip me off."

While Microsoft declined to respond to various media outlets' request for comment, Bill Gates offered his own opinion on his former colleague's tell-all.

"While my recollection of many of these events may differ from Paul's, I value his friendship and the important contributions he made to the world of technology and at Microsoft," Bill Gates wrote in an email reprinted in a March 30 Reuters article.

Some early Microsoft employees have questioned Allen's take on the company's early days, according to a March 30 report in The Wall Street Journal. "Mr. Allen for instance, puts himself in meetings that people familiar with the meetings say he never attended." It also quotes two-decade Microsoft employee Carl Stork as "surprised" that Allen would go public in such a manner.

On the smartphone front, Microsoft kicked up its public-relations game this week ahead of the MIX11 conference, insisting in a March 30 posting on The Windows Phone Developer Blog that its Windows Phone platform remains a viable one for both developers and consumers.

That post featured what Microsoft considers the "numbers that matter" when it comes to Windows Phone: Windows Phone Developer Tools have been downloaded some 1.5 million times, Windows Phone developer community boasts 36,000 members, and the Windows Phone 7 ecosystem contains around 11,500 apps.

"We recognize the importance of getting great apps on our platform and not artificially inflating the number of actual apps available to [customers] by listing -wallpapers' as a category, or perhaps allowing competitor's apps to run on the platform to increase tonnage," Brandon Watson, Microsoft's director of developer experience for Windows Phone 7, wrote in the posting. "We also don't believe in the practice of counting -lite' apps as unique quality content. In reality they only exist because developers can't have a Trial API and must therefore do extra work."

However, that blog posting declined to mention one number that must matter very much to Microsoft: consumer sales.

"You might think that the primary driver is number of handsets in market," Watson also wrote. "Based on the conversations we are having with some of our developers, many are telling us that they are seeing more revenue on our platform than competing platforms, despite the fact that we cannot yet match the sheer number of handsets being sold."

Microsoft had previously confirmed that some 2 million Windows Phone 7 units had been sold by manufacturers to retailers, although the exact number reaching consumers' hands remains unclear. "Our numbers are similar to the performance of other first-generation mobile platforms," Achim Berg, Microsoft's vice president of business and marketing for Windows Phones, mentioned in a Q&A posted Dec. 21 on the company's corporate Website. "It takes time to educate partners and consumers on what you're delivering, and drive awareness and interest in your new offering. We're comfortable with where we are, and we are here for the long run."

Over the past few weeks, though, the company has encountered speed bumps related to software updates for the platform, which in turn has sparked some anger among early adopters. In the United States, two Windows Phone 7 devices-the Dell Venue Pro and HTC HD7-are currently in the delivery stage for the "NoDo" update, which includes cut-and-paste functionality; the other three remain in the "Testing" stage, which is apparently controlled by the carriers.

Despite its relatively tiny share of the smartphone market, one analyst believes that Windows Phone 7-thanks in no small part to Microsoft's recent alliance with Nokia-will surpass both Research In Motion's BlackBerry and Apple's iOS to become the second-ranked smartphone operating system in the world by 2015, lagging behind only Google Android.

"Up until the launch of Windows Phone 7 last year, Microsoft has steadily lost market share while other operating systems have brought forth new and appealing experiences," Ramon Llamas, an analyst with IDC, wrote in a March 29 report. "The new alliance brings together Nokia's hardware capabilities and Windows Phone's differentiated platform."