Windows XP launch prompts regulation concerns

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Microsoft is set to face further regulatory scrunity from the European Commission after the US software giant launched its latest operating system in a record multimillion-pound blaze of publicity yesterday.

Chris Huhne, an MEP and the spokesman for the European Liberal group, urged UK businesses yesterday to complain to the European Commission about Windows XP, thereby allowing Brussels to widen its investigation into the new operating system.

Microsoft hopes that Windows XP, its first new operating system for six years, will revive flagging computer sales. Steve Ballmer, the chief executive, said the launch was "the biggest thing the company had done since Windows 95".

The software, which went on sale in 63 cities around the world, bundles together a larger number of applications than its predecessor, including a web browser, an e-mail program, an instant messenger and a digital photo editor. This has prompted calls for Brussels to step up its exisiting investigation over Microsoft's alleged anti-trust activities.

Mr Huhne said: "Windows XP is again bundling software for playing movies, MP3 files, audio and video. Many people will need a new PC to run the monster. To ensure that the licence is more carefully controlled, Microsoft has to activate a special code whenever hardware is upgraded or the software moved to a new PC. Microsoft's new tariff will also entail a big increase in business licensing costs."

The Commission canfine Microsoft up to 10 per cent of its annual revenue, or $2.5bn (£1.7bn), if the company is found guilty of using Windows XP to extend its monopoly.

Microsoft has spent a record $250m on marketing Windows XP, in the hope that retail-shy US consumers will swallow the hype and upgrade their systems.

Bill Gates, Microsoft's co-founder and its chief software architect, last night hosted the biggest corporate party in New York since the 11 September terror attacks. Other promotional gimmicks included a free Sting concert webcast and a Madonna track to accompany the campaign. At the eleventh hour, Microsoft had to scrap its planned XP advertisements, which were to have depicted computer users flying into high-rise buildings under the slogan "Learn to fly". This was changed to "Yes you can".

Mr Ballmer, speaking at the UK launch of XP at London's Royal Festival Hall, said its trademark features were its reliability and compatibility. The new system is designed to be easier to use than previous versions and harder to crash. But XP needs more computer memory and a faster microprocessor, which will force businesses and consumers with PCs over two years old to buy new ones.