The Statement of Objections is a formal step in European
antitrust proceedings which can indicate the final outcome, but
does not prejudge it. The Statement follows an extensive
investigation into Microsoft's Windows 2000 operating system which
was launched in February 2000.
Microsoft may have an overwhelmingly dominant position in the
market for personal computer operating systems and also has a very
significant market share in the market for low-end server operating
systems. Most PCs today are embedded into networks which are
controlled by servers, with interoperability - the ability of the
PC to talk to the server - providing the basis for network
computing.
To enable alternative server software to interoperate in the
prevailing Windows PC and server environment, technical interface
information must be known. Without such information, alternative
server software would be denied a level playing field, as it would
be artificially deprived of the opportunity to compete with
Microsoft's products on technical merits alone. The Commission
believes that Microsoft may have withheld from vendors of
alternative server software key interoperability information that
they need to enable their products to “talk” with Microsoft's
dominant PC and server software products. Microsoft may have done
this through a combination of refusing to reveal the relevant
technical information, and by engaging in a policy of
discriminatory and selective disclosure on the basis of a
"friend-enemy" scheme.
Further, the Commission believes that Microsoft may have
reinforced this strategy of extending its dominance from the PC to
the server through the operation of an abusive licensing policy for
Windows 2000. Under the Microsoft scheme, if customers choose not
to use an all-inclusive Microsoft scenario for PCs and servers, but
decide to use competing server products, they are forced to bear a
double cost. The effect of this policy may be to artificially drive
customers towards Microsoft server products, reducing choice to the
detriment of the final customer.
Media player
Finally, the Commission also believes that Microsoft may have
acted illegally by incorporating its new Media Player product into
its Windows PC operating system.
Media players are software products which allow consumers to see
and hear audio and video files without lengthy download times on
their PCs. These innovative products are developed and manufactured
by several companies, including Microsoft itself. However,
Microsoft's ties its Media Player to its ubiquitous Windows
operating system, a channel of distribution which is not available
to competing vendors of media players. Microsoft may thereby
deprive PC manufacturers and final users of a free choice over
which products they want to have on their PCs, especially as there
are no ready technical means to remove or uninstall the Media
Player product.
Competing products may therefore be at a disadvantage which is
not related to their price or quality. The result is a weakening of
effective competition in the market, a reduction of consumer
choice, and less innovation.
Mario Monti, Competition Commissioner said:
"Server networks lie at the heart of the
future of the Web and every effort must be made to prevent their
monopolisation through illegal practices. The Commission also wants
to see undistorted competition in the market for media players.
These products will not only revolutionise the way people listen to
music or watch videos but will also play an important role with a
view to making Internet content and electronic commerce more
attractive. The Commission is determined to ensure that the
Internet remains a competitive marketplace to the benefit of
innovation and consumers alike."
Next steps
Microsoft has about two months to reply in writing to the
supplementary statement which is now merged with the existing
procedure triggered by a Sun Microsystems complaint, which was at
the origin of a first statement of objections of 3rd August
2000.
As part of the procedure, Microsoft will have the right to
access the file compiled by the Commission and can also request an
oral hearing to present its case.
The first statement of objections focused on discriminatory
licensing and refusal to supply software information to allow for
the interoperability of rival server products with older versions
of Microsoft's Windows operating systems.
