Microsoft Settles with EU in Web Browser Dispute

Microsoft and the European Commission, the European Union's antitrust watchdog, announced a settlement over the inclusion of Internet Explorer with Windows. The European Commission had expressed antitrust concerns over Internet Explorer coming pre-installed on the operating system without other browser choices being presented to end consumers, which Microsoft attempted to counter by offering a "ballot screen" letting users choose between Internet Explorer and competing browsers. Microsoft's rivals, including Opera and Google, then asked for changes to the ballot screen, which Microsoft apparently enacted.

Microsoft has resolved its long-standing dispute with the European Commission over the inclusion of Internet Explorer with Windows. Under the terms of the agreement, announced on Dec. 16, Microsoft will install an automatic "ballot screen" that will let Windows users choose between 12 different browsers.

The European Commission, the law enforcement body of the European Union responsible for antitrust initiatives, had originally suggested over the summer that Windows 7 would have to ship in Europe without Internet Explorer 8 installed. Seemingly anxious to avoid having to produce a standalone European version of Windows, Microsoft suggested in August that it would install the ballot screen allowing choice between IE 8 and rival browsers.

A sample screen provided by Microsoft at the time showed rival browsers such as Mozilla Firefox and Google Chrome given the same amount of onscreen real estate as Internet Explorer. While the strategy initially carried some risk for Microsoft, given that it announced the strategy before the commission completed its review of the proposal, the commission seemed publicly willing to put the ballot-screen offer before consumers.

That was before reports in November suggesting that Mozilla, Opera and Google would all ask the Commission for last-minute changes to the offer. At issue, apparently, was the concern on the part of those competitors that Microsoft would somehow leverage the ballot screen to give itself an unfair advantage.

Online reports circulating around Dec. 3 indicated that Microsoft had agreed to make its rivals' sought-after changes to the ballot screen, although details were kept largely under wraps until the finalization of the deal between Microsoft and the European Commission on Dec. 16.

"Today, the Commission has resolved a serious competition concern in a key market for the development of the Internet, namely the market for Web browsers," Neelie Kroes, European Commissioner for Competition Policy, said in prepared remarks for a Dec. 16 press conference in Brussels. "More than 100 million European computer users stand to benefit from the Commission's decision today. An even higher number will benefit over the five-year lifetime of the commitments made binding on Microsoft with today's decision."

Under the terms of the decision, the Windows 7 ballot screen will display 12 Web browsers that run on Windows. "Membership of this list will be determined by usage share in the European Economic area," Kroes added. "Microsoft is also prohibited from circumventing free and effective browser choice by any contractual, technical or other means."

In addition, Microsoft has been ordered by the Commission to report, first within six months and then annually, on the implementation of its ballot screen. Microsoft will also be "obliged" to adjust that implementation should the Commission feel it necessary.

The ballot screen is due to go into effect in mid-March 2010.

"The measures approved today reflect multiple rounds of input from industry participants relating to competition in Web browser software and interoperability between various Microsoft products and competing products," Brad Smith, Microsoft's senior vice president and general counsel, wrote in a Dec. 16 statement.

Microsoft's rivals also seemed publicly accepting of the deal.

"This is a victory for the future of the Web," Jon von Tetzchner, CEO of Opera Software, wrote in a Dec. 16 statement. "Opera has long been at the forefront of Web standards, which ensures that people have equal access to the Web anytime, anywhere and on any device. We see the outcome of the EU's investigation as a testament to our mission."

Microsoft and the European Commission have had a contentious relationship, with the latter fining Redmond some $631 million in 2004 for allegedly monopolistic business practices. Microsoft has been pushing to resolve many of its issues with the Commission before the end of 2009, when Neelie Kroes is replaced by Joachin Almunia, formerly the Socialist Party candidate for prime minister of Spain in 2000. Almunia is widely seen as someone who will continue the Commission's crackdown against monopolistic practices.

Analysts seemed unsurprised by the browser settlement.

"Microsoft has bent over backward to try to accommodate the European Commission (EC)," Roger Kay, an analyst with Endpoint Technologies Associates, said in an e-mail to eWEEK. "I suppose the only surprise is that the EC finally went for it. There was some thought that the EC's (not so) hidden agenda was to tip the field in favor of local companies (e.g., Opera) and that therefore it wouldn't settle just to keep Microsoft tied up in knots."

However, "Microsoft has some pretty persuasive lawyers on staff," Kay added, "and at some point the EC had to admit that there were no further unresolved issues. For Microsoft, getting this ruling was like trapping spilled mercury."