Microsoft Corp. got an early Christmas present when the European Commission announced today that it was dropping its antitrust case against the company.
The commission had charged that Microsoft distorted competition by tying Internet Explorer to Windows. European regulators argued that this tying hindered innovation in the market and created artificial incentives for software developers and content providers to design their products or web sites primarily for Internet Explorer.
To settle the case, Microsoft promises to offer computer makers and Windows users in Europe the ability to install different web browsers, and to allow them to turn Internet Explorer on or off. Microsoft also committed to making far-reaching interoperability disclosures.
"Millions of European consumers will benefit from this decision by having a free choice about which web browser they use,” said EU Competition Commissioner Neelie Kroes in a press release. “Such choice will not only serve to 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."
Microsoft General Counsel Brad Smith in a statement said the company was “pleased with today’s decision by the European Commission, which approves a final resolution of several longstanding competition law issues in Europe.”
Smith said the company was “embarking on a path that will require significant change within Microsoft. Nevertheless, we believe that these are important steps that resolve these competition law concerns.”
For more than a decade, Microsoft has battled European regulators over antitrust issues.
The company’s legal troubles began in 1998, when a complaint from Sun Microsystems triggered the first EC investigation into server interoperability.
A year later, the commission began looking into whether Microsoft unlawfully included media playback capabilities in Windows.
In 2004, the commission determined that Microsoft had abused its dominant market position. It required the company to create a version of Windows without Windows Media Player, and to make technical documentation for its proprietary Windows Server communications protocols available to competitors.
But regulators were not satisfied with Microsoft’s compliance. In 2006, the EC fined the company 280 million Euros ($407 million) for failing to provide adequate technical documentation. The EC also complained that Microsoft’s pricing on patents related to protocol specifications was unreasonable and discriminatory.
For a brief time in late 2007, Microsoft was declared to be in full compliance with the 2004 decision, but the legal lull didn’t last. In February of 2008, the commission hit the company with a 899 million Euro ($1.3 billion) fine for protocol pricing. Microsoft has appealed the fine; the case is still pending.
In 2008, the commission announced two new investigations. One was based on complaints from an industry association of competitors about server interoperability, while the other came from European browser maker Opera relatied to inclusion of IE in Windows.
Microsoft proposed a settlement in July. After extensive industry feedback and market testing, the EC formally adopted the settlement today.