Microsoft's European Antitrust Talks Continue

Byline: John Burgess

BERLIN, March 17 -- Microsoft Corp. chief executive Steven A. Ballmer held a second day of talks with European Commission officials in Brussels Wednesday aimed at crafting a last-minute settlement to the agency's anti-trust case against the software company.

"We remain actively engaged with the commission in the hopes of amicably resolving these issues," said Microsoft spokesman Jim Desler. "Discussions are on-going." He declined to discuss content of the talks.

On Monday, anti-trust officials from the European Union's 15 member countries gave unanimous approval to a proposal from commission staff members to find Microsoft in violation of the union's competition laws. The case concerns features of its near universal Windows software and secrecy of certain programming code.

On Tuesday, Ballmer flew in to Brussels to join the Microsoft negotiating team in talks with Mario Monti, the European body's competition commissioner. If no settlement is reached, the full commission is scheduled to vote on a ruling March 24.

Amelia Torres, spokeswoman for Monti, confirmed that discussions with Microsoft were underway. "We are firmly on track for an announcement next week, as was always the plan," she said. She declined further comment.

With a largely affluent population of 370 million -- set to expand to 450 million on May 1 with the induction of 10 new member countries -- the European Union is one of Microsoft's largest markets. The company has been struggling to find a solution to the four-year-old case, but on terms that it can accept.

In a series of preliminary decisions, Monti's office has largely upheld two major claims against Microsoft:

- That the company's practice of including a media player -- software that can play video and audio -- as a standard feature of its near universal Windows operating system unfairly impinges on other companies' ability to sell media players.

- That technical details of Microsoft software for large computers known as servers is not sufficiently public to allow other companies to make programs that will work well with the Microsoft software.

According to people familiar with the case, the commission staff favors requiring Microsoft to offer a version of Windows without the built-in media player, on the grounds that this would help other media player companies compete. In the past, Microsoft has argued that such steps are technically difficult and would harm the interests of consumers, who find the multiple functions of Windows useful.

The commission would also impose fines on Microsoft and require that it disclose more technical details of its server software.

Since Windows's introduction in 1983, Microsoft has steady added new features to the operating system, such as Internet browsing software and the media player. Because Windows is used on most personal computers in the world, critics say that including these new features unfairly disadvantages other companies that sell similar software -- RealNetworks in media players, for example. People won't buy their software, the logic goes, if something similar is a standard feature on Windows.

Microsoft has been in and out of court since the early 1990s in the United States fighting allegations of market abuse. Years of litigation in the United States focused on allegations that inclusion of Internet Explorer software in Windows violated U.S. anti-trust laws. That case was eventually settled with the Justice Department, although state governments continue to appeal it on the grounds the settlement was insufficient.

David Wood, an attorney at the Brussels office of the anti-trust law firm Howrey Simon, said that Microsoft's team in Brussels will probably find it's too late to persuade Monti to reject his staff's plan. Given varying views in the United States of Microsoft's economic power, Monti might feel relatively little political pressure to back off, Wood said. "The sun is already setting on this decision," he said.

Wood said that Microsoft is probably trying to negotiate a settlement that would take care of existing complaints but minimize impact on what it can do in future business.

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