EU criticized for antitrust action against Microsoft

Four European Parliament members warned the European Commission that its actions toward Microsoft could endanger the competitiveness of European businesses by delaying the release of Vista, Microsoft’s next operating system.

In a strongly worded letter submitted Thursday to Competition Commissioner Neelie Kroes, the legislators said Microsoft regards the E.U.’s regulatory actions as a “risk factor.” Microsoft used the terminology in its annual report filed Aug. 25 with the U.S. Securities and Exchange Commission (SEC).

“This effectively means that the Commission’s actions are endangering the ability of European business to compete globally,” the legislators wrote.

The letter is signed by U.K. representatives Chris Heaton-Harris, Sharon Bowles and Peter Skinner, plus Michal Kaminski of Poland.

Microsoft wrote in the SEC filing that its ongoing appeal of European Commission’s March 2004 antitrust decision means there’s uncertainty over the legal principles regarding product design in the European market.

“These uncertainties could … delay release dates for Windows or other products,” the SEC filing read.

Microsoft has provided copies of Vista to the Commission along with technical information, said spokesman Tom Brookes. The Commission, he said, has raised concerns regarding complaints by competitors.

In March, the Commission sent a letter to Microsoft Chief Executive Officer Steve Ballmer, saying it was concerned about certain functions in Vista and how compatible the OS would be with products from other software companies.

Commission spokesman Jonathan Todd said Thursday it’s misleading to say the Commission is delaying Vista’s European launch.

Todd disputed Microsoft’s characterization of “uncertainty” in E.U. competition rules, saying the Commission has given guidance to the company many times regarding its antitrust decision. The Commission doesn’t have to give Microsoft a “green light” before the company puts Vista on the market, he said.

The Commission sent Microsoft another detailed list of concerns in July, which the company replied to last week, Todd said. Ballmer and Kroes also spoke on Aug. 22.

“It is up to Microsoft to accept and implement its responsibilities as a near monopolist to ensure full compliance,” Todd said.

Brookes said Microsoft was unaware of the letter from the European Parliament members until Thursday morning. Two of the legislators said their letter is based on information contained in the company’s SEC filing.

Heaton-Harris referred questions to Microsoft, regarding why the company thought the E.U. might cause a delay Vista’s shipping date. Microsoft has said Vista will be ready for corporate customers in November and consumers in January.

Bowles said she has participated in informal sessions where Commission members have acknowledged they are watching Microsoft’s development of Vista closely. She said she had no specific information on what the Commission is currently doing, as few details are publicly released.

However, the Commission’s actions have prompted concern among small to medium-size businesses in Europe, worried that the E.U. could potentially delay Vista’s release, putting them at a competitive disadvantage with the rest of the world, Bowles said.

“That climate of uncertainty caused through competition policy and actions already taken … are meaning that Europe is being deprived,” Bowles said.

Europe is in the middle of a 10-year plan, called the Lisbon Agenda, to increase the continent’s competitiveness in technology. The legislators wrote that they are concerned the Commission’s actions toward Microsoft are undermining Europe’s moves to become a knowledge-driven economy.

Microsoft and the Commission have locked horns over how the company is complying with the March 2004 antitrust decision. The Commission fined Microsoft €280.5 million (US$357 million at the time) in July for failing to provide technical documentation for certain protocols used by its server products.

The Commission required disclosure of the protocols to allow competitors to develop compatible products. Microsoft is appealing.

Microsoft is also appealing the entire March 2004 decision, in which it was fined €497 million (US$613 million at the time), before the European Court of First Instance in Luxembourg.

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