EU in quandry on new action against Microsoft

BRUSSELS - Microsoft's (Nasdaq: - ) new Vista operating system has put the in a quandry on whether to open a new front against the software giant before a court clarifies the EU antitrust watchdog's authority.

Rivals such as Google (Nasdaq: - ) and Adobe (Nasdaq: - ) are wary of the new version of Windows, set for release early next year.

They could formally ask the Commission to act and it could order changes in Vista, following on its landmark 2004 antitrust decision that found Microsoft muscled out other companies.

But if the Court of First Instance (CFI) were to annul that decision, as Microsoft has asked, that would pull the legal rug out from under the Commission.

The problem is that the ruling by the 's second-highest court may not arrive until after Vista is on the market next year.

The Commission fined Microsoft nearly half a billion euros in its 2004 decision and ordered sanctions, including the sale of a modified version of Windows. Microsoft appealed to the CFI, which heard arguments last month.

For the time being, Microsoft has not slowed down from preparing Vista for market and the Commission is not backing off from following up on its 2004 ruling.

Competition Commissioner Neelie Kroes told Microsoft in a letter in March that its plans for Vista could "deny PC manufacturers and consumers a real choice among competing software products and stifle innovation," the Commission said.

Microsoft argues it has scrupulously obeyed the law all along and said its decisions to compete with Adobe were "guided by a principled commitment to preserve healthy competition."

UNFINISHED BUSINESS

But the Commission has unfinished business trying to enforce its earlier sanctions against Microsoft, and is contemplating fines of up to 2 million euros ($2.5 million) a day.

"The European Commission's provisional view is that Microsoft is still not compliant with the requirements of the March 2004 decision," spokesman Jonathan Todd said.

The Commission would have to send a direct order to force Microsoft to change Vista, if it found such a step were justified. The pending court case muddies the waters.

The court could fully uphold the Commission's 2004 ruling or entirely throw it out. The court could also annul parts of the decision and set out a legal checklist for future Commission action, as it has in the past.

The Commission has no way of knowing whether there will be such a checklist or its contents, making action difficult.

Courts or competition authorities in the United States, Asia and Europe with jurisdiction over 31 countries have found the software giant illegally threw its weight around to shake off competitors. Adobe and Google wonder whether they are the next targets of Microsoft.

Adobe, maker of the .pdf portable document format, gives away readers but makes its money by selling the software to scan documents or print word-processed and other documents to the popular non-changeable format.

Vista will include for free its own version of the Adobe product, called XPS, that does much the same thing.

Adobe's files are so-called "cross platform," which means they can be read by Microsoft, or Apple, among others.

Microsoft says XPS "can be licensed royalty free" and "implemented on other platforms and devices." In other words, it has not built cross-platform devices but has no objection if others do.

Then there is Internet search engine firm Google. The new version of Microsoft's Internet Explorer has a built-in Window to take computer buyers to a search engine.

Microsoft says it is up to computer makers, which distribute nine out of every 10 copies of Windows sold, to decide whether that Window should take users to Microsoft's MSN search engine, or some other.

Computers makers will be able to sell the space, Microsoft says. Google did not return calls and e-mail seeking comment.

($1=.7887 euro)

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