New Brussels warning to Microsoft

The European Union’s top antitrust regulator has warned Microsoft that the next version of its flagship Windows operating system, Vista, due out next year, may run foul of competition rules.

Neelie Kroes, the EU’s competition commissioner, wrote to Microsoft last week to express her concerns over plans to integrate an internet search facility and several other programmes into Vista.

The Brussels regulator believes such moves may end up crushing providers of competing products, and violating a precedent set in the Commission’s landmark March 2004 decision ruling against Microsoft.

Ms Kroes’ spokesman stressed that her letter did not mark the opening of a formal Commission antitrust probe, but said Microsoft would presumably have its “own interests at heart” and not launch a product that violated antitrust law.

The group has already been forced to postpone Vista’s launch several times because of technical difficulties - and the Commission’s intervention could present Microsoft with yet another obstacle.

Ms Kroes’ letter is also certain to distract the group’s attention from a crucial two-day hearing that starts in Brussels on Thursday.

It will present Microsoft with a last chance to demonstrate that it has fully complied with the Commission’s 2004 decision and so stave off the threat of fresh antitrust fines worth up to €2m a day.

Brussels believes that Microsoft has failed to implement a key element of that ruling, and has warned it will will impose new financial penalties unless the group moves quickly.

Microsoft officials say they will on Thursday submit evidence showing the Commission’s accusations are incorrect, while signalling that its stands ready to do all it can to satisfy the regulator’s concerns.

But while the group continues to battle on this front, Ms Kroes’ letter to Steve Ballmer, Microsoft’s chief executive, suggests there may be further clashes ahead.

Her spokesman said the Commission’s concerns centred on the integration of “internet search, office digital rights management and software to create fixed document formats comparable to PDF”.

Her intervention will be welcome news to companies such as Google and Yahoo, whose search machines are currently leading the pack, as well as Adobe, the maker of the Adobe Reader software for handling portable document format (PDF) files. They and other software companies fear that Vista’s powerful bundle of products could hurt their businesses.

The regulator said it was was also worried about Microsoft’s “possible failure to disclose [to other companies] all technical information necessary to make competing products interoperable with Vista”.

Ms Kroes’ spokesman added: “We are concerned that such behaviour may deny computer manufacturers and consumers a real choice among competing software products and stifle innovation.”

A spokesman for the group said it had not yet received Ms Kroes’ letter, and was therefore unable to comment on its details. But he added that “consumers are free to use a wide range of competitor products, and Windows Vista is designed to respect the choices that consumers make”.