Microsoft is to launch a last-ditch effort on Wednesday to avoid harsh penalties in Europe for alleged monopoly behaviour that could force it to change the way it sells its ubiquitous Windows software.
Yet beyond the fireworks expected as the United States software giant faces off with its critics during three days of hearings, Microsoft’s underlying aim is likely to be sniffing out the remaining prospects for a damage-controlling settlement with the European Union.
”I think there’ll be quite a lot of grandstanding with a view on Microsoft’s part to achieve a negotiated settlement,” said Martin Baker, chief antitrust lawyer at Taylor Wessing in London.
”They’re going to want to limit the economic impact.”
Gathered together for the first time as the four-year Brussels probe nears an end, EU regulators, Microsoft lawyers and ”interested third parties” — mainly angry Microsoft competitors — weren’t expected to present much new evidence. Instead, they will use the talks behind closed doors to poke holes in each other’s cases.
Microsoft faces charges it is illegally trying to extend its Windows operating system dominance into the market for servers, which tie desktop computers together, and that for programs that play music and video on computers.
The European Commission, the EU’s antitrust enforcer, warned last August it was prepared to levy potentially hefty fines for past misconduct and demand its own remedies, such as forcing Microsoft to remove its built-in Media Player from Windows or to include rival players as well.
The company also may have to disclose more prized software codes to competitors in the server market.
Although an order to spin off Media Player, for example, would legally only apply to software sold in the EU, Microsoft has argued creating different versions would be impractical and expensive.
Its main concern, however, is defending its long-standing practice of keeping Windows on top by incorporating new features — which it sees as benefiting consumers and competitors view as unfair competition.
The EU gave Microsoft a ”last chance” to respond, but commission insiders say it appears to be all but set, having delayed a decision several times already to buttress its charges with additional evidence.
EU trustbusters want to avoid a repeat of three embarrassing court defeats last year and to have their defences ready in case of another transatlantic political firestorm like the one that followed their unprecedented 2001 veto of the GE-Honewell merger.
”The commission’s going to want to make sure it’s got a bombproof case,” Baker said.
For its part, Microsoft seems to be playing for time. It was granted two extra weeks — less than it asked for — to file its written response last month. And it switched tactics by requesting the hearing after waiving its right to one a year ago.
Also at Microsoft’s request, the session will run an extraordinary three days — Wednesday to Friday — instead of the usual one or two. It had asked for four.
After an opening statement by EU regulators, Microsoft will have a day and a half to hammer its key points home. It also will get a chance for a closing statement after its critics — companies including Sun Microsystems and RealNetworks — have their say.
In a statement issued on Monday, Microsoft maintained its innocence while taking pains to keep the door open for a negotiated deal.
”Microsoft remains committed to finding a constructive resolution to the case that addresses any concerns of the Commission while preserving the company’s ability to innovate and to improve its products,” it said.
With the writing on the wall, Microsoft critics like Ed Black, head of the Computer and Communications Industry Association, accused the firm of trying ”to make sure that any remedies imposed … are diluted to the point where they pose no real threat to Microsoft’s continuing use of its monopoly power”.
The Washington-based lobbying group, which includes Sun, Kodak, Oracle and Nokia, also noted that the landmark US settlement of similar charges ”is still under judicial review”, which Black said undermined Microsoft’s claim that Brussels need go no further.
A US appeals court last week pointedly questioned whether the Bush administration’s antitrust settlement with Microsoft adequately protects consumers and competitors from monopolistic abuses. A decision is expected in the coming months.
The EU is not expected to make its decision before spring. — Sapa-AP