To: Christopher White who wrote (7202 ) 10/21/1997 7:32:00 PM From: Glenn D. Rudolph Respond to
FOCUS-EU probes MicrosoftInternet deals
Reuters Story - October 21, 1997 18:50
%EEC %US %BUS %DPR %GB %BE %TEL MSFT NSCP WCOM V%REUTER P%RTR
(Adds reaction from Netscape Britain and European Internet
service providers)
By Amelia Torres
BRUSSELS, Oct 21 (Reuters) - The European Commission is
probing contracts between Microsoft Corp and European
Internet service providers, Commission sources said on Tuesday,
adding its concerns were similar to those expressed by the U.S.
Justice Department on Monday.
The sources, who said that any conclusions on the probe were
"months away," added that the European Union executive had been
cooperating closely with United States antitrust authorities
regarding Microsoft's Internet practices.
The U.S. Justice Department accused Microsoft of using its
Windows "monopoly" to force computer makers to include the
Microsoft Internet browser in pre-loaded software, putting
rivals such as Netscape Communications Corp . at a
competitive disadvantage.
The Justice Department further asked a federal court to slap
a $1 million a day fine on Microsoft for as long as the alleged
violations continue.
The Commission's investigation is different in the sense
that it focuses on a series of contracts with Internet service
providers (ISPs) who have licence agreements with Microsoft,
rather than on contracts with computer manufacturers.
The sources did not give any details, but said that under a
1994 undertaking given to the Commission by the U.S. software
firm, the company is allowed to develop products to be
integrated in its operating systems. But it cannot force
licensees to buy other products in return for getting its
popular software licences.
"It does not allow (Microsoft) to condition the granting of
a licence for an operating system on the obligation to take a
licence for another product" a source said, adding that this
sort of practice could have the same effect as that at stake in
the U.S.
The Commission's investigation, which was started on its own
initiative -- there were no complaints, the sources said -- left
most European ISPs bemused as the contracts, they said, were
mainly about the distribution of Microsoft's Explorer browser.
Browsers are used to navigate the Internet's World Wide Web.
"The only contracts I'm aware off are for distributing
Microsoft Internet Explorer and things like that and I think you
would find those rather uninteresting," Jim Dixon, president of
the European Internet Service Providers Association, told
Reuters.
Netscape's managing director in Britain, Stephen Voller,
said he thought the Commission was probing contracts by which
Microsoft allegedly forced service providers to offer only its
browser, not Netscape's.
"About a year ago Microsoft went agressively after this
market in Europe, to the point that they went to the major ISPs
in each of the major European Countries with a proposition that
they would allow them to distribute their browser free of charge
providing they did not distribute any other browser," Voller
told Reuters.
He said hundreds if not thousands of companies had signed
up.
Luc Dierckx, managing director of the Belgian unit of UUNET,
a leading Internet access provider owned by WorldCom Inc
, said that in Belgium the company only proposed the
Explorer browser.
But the agreement with Microsoft was not exclusive, he said.
"We've done things in the past with Netscape and we could make a
similar agreement with it again, but today we have an agreement
with Microsoft," Dierckx told Reuters.
If the Commission concluded with serious concerns over
Microsoft's contracts with Internet service providers, it would
inform the company of its grievances by way of a so-called
statement of objections before deciding whether to take any
action.
If Microsoft failed to address its concerns, the Commission
could ultimately fine it up to 10 percent of its turnover for
abuse of dominant position -- prohibited in the EU under article
86 of its founding treaty of Rome.
The Commission sent one such statement of objections to the
Redmond, Washington-based software giant less than six months
ago about other unspecified licensing agreements after it
received a complaint, Commission sources said last week.
In all there are about a dozen on-going Microsoft-related
investigations in Europe, the sources said.
The EU and the U.S. authorities have worked closely in the
past to force global companies to change restrictive practices
under a 1991 co-operation agreement on competition matters.
In 1994 they used such powers to obtain an undertaking from
Microsoft under which the company agreed that computer
manufacturers with a licence to use its operating system
software were free to purchase products from other software
makers. The undertaking, which also resulted in a consent degree
in the United States, expires at the end of the year 2000.
