Microsoft settles with EU after 10-year browser row

PC users to get a pop-up 'choice screen' of 12 browsers

Sarah Arnott
Thursday 17 December 2009 01:00 GMT
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Europe's competition watchdog accepted a Microsoft plan to offer a choice of internet browsers yesterday, ending a decade-long dispute over the software giant's dominant market position.

By March, all European users of the Windows operating system will see a pop-up "choice screen" allowing them to select one of 12 major browser programmes including Firefox, Opera and Safari, as well as Microsoft's own Internet Explorer product. Computer manufacturers will also be able to choose to sell PCs without the Microsoft browser.

Neelie Kroes, the EU competition commissioner, said the plan is good for both consumers and the software industry. "Millions of European consumers will benefit from this decision by having a free choice about which web browser they use," she said. "Such choice will not only improve people's experience of the internet now but also act as an incentive for web browser companies to innovate and offer people better browsers in the future."

The scheme represents a major strategic shift for Microsoft. Brad Smith, the company's general counsel, said: "We are embarking on a path that will require significant change. Nevertheless, we believe that these are important steps that resolve these competition law concerns."

Internet Explorer is by far the most dominant browser, accounting for more than half of all internet traffic, compared with less than a third for Firefox, its nearest rival. In January, Brussels ruled that Microsoft was gaining an "artificial distribution" by bundling its browser in with the ubiquitous Windows operating system.

The "choice screen" solution has been under discussion for more than six months, after the commission realised that the initial Microsoft threat to pull Internet Explorer altogether would leave Europe's Windows users with no way to get on to the web to download an alternative.

The row over browsers is just one of a series of disputes that have cost Microsoft €1.6bn (£1.4bn) in fines since 2004. Commission inquiries have included compatibility issues affecting both Microsoft's servers and its Office software, and the bundling of its Real Player media system.

Neil Macdonald, a fellow at the researcher Gartner, described yesterday's deal as "a reasonable compromise". "Many people will just use what Microsoft provides but they will be presented with a choice, and that is what the EU was trying to do," he said.

The Redmond-based company yesterday also agreed to provide developers with more interface information about a range of products, including Windows Server and Office. But Brussels has not yet concluded an ongoing investigation into whether Microsoft is holding back similar information about its browser. Ultimately, the company could need a fundamental change in its strategy.

"Microsoft will always have these issues because it is the dominant vendor," Mr Macdonald said. "But it is increasingly boxed in: if Windows is not allowed to include other things, it breaks the Microsoft business model."

Steely Neelie: A fitting finale

The deal settling a 10-year dispute over Microsoft's abuse of Windows' dominance is an appropriately high-profile close for Europe's competition commissioner.

Neelie Kroes moves on to take the IT and Telecoms post after Christmas, concluding a tenure spanning economic chaos that has threatened to redraw the lines between private industry and the state.

The former Dutch transport minister arrived at the Commission in 2004 and quickly earned the moniker "Steely Neelie" for unflinching investigations into a lack of cross-border competition in energy, banking and pharmaceuticals.

Her strongest stance was on state aid to industry. But when the credit crunch left Europe's banks teetering on the brink of collapse, she approved more than 40 bailouts over the course of the crisis – singlehandedly belying Brussels' reputation for bureaucratic torpor.

Once the worst was over, Ms Kroes was swift to return to form. By January this year she was demanding "serious restructuring" by the end of the year. In her native Netherlands, she oversaw the break-up of ING, the biggest bank. And in the UK she imposed savage cuts on government-aided Royal Bank of Scotland (RBS) and Lloyds Banking Group. RBS is being forced to hive off its insurance business and sell off 318 branches, Lloyds to sell some 600 branches.

Sarah Arnott

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