EU one step behind as Microsoft targets Google

European Union regulators may still be fighting yesterday's antitrust war against Microsoft's Media Player while the software giant marches on to conquer Google.

The search engine seems so impregnable that "to google" has become a verb meaning to look for something on the Web. But Microsoft has shown elsewhere that it can go from nothing to monopoly.

The European Commission will rule soon that Microsoft illegally bundled its Media Player audio-visual software into its dominant Windows operating systems to help defeat rival RealNetworks. While the investigation was under way, Microsoft's market share zoomed past RealNetworks.

In the 1990s, Microsoft crushed the once-dominant pioneer Web browser Netscape Navigator, clearing the way for its own Internet Explorer to become ubiquitious.

The United States took the software giant to court and won its antitrust case. But the remedies the government then negotiated are narrow and, critics say, poorly enforced.

Microsoft has said the remedies solved any problems.

In a recent court filing, Microsoft said it "has made compliance with its obligations ... a top priority of the company, and the company continues to devote substantial resources to its compliance work." The US judge in the case agreed, saying that for the most part, "The (court) decree seems to be working." But the case did not deal with audio-visual software. That helped spark an EU case charging that Microsoft attacked RealNetworks with tactics like those used against Netscape.

Against that background, Microsoft last week began offering features familiar to users of Google - a Microsoft search toolbar with a pop-up blocker, a feature that stops unwanted small windows, often with ads, from showing up.

It was the first fruit of Microsoft's heavy research investment to take on Google. The US software giant sees the move as legitimate innovation, but some see it as ominous.

"We are reviewing allegations that Microsoft is currently engaged in a campaign against various Internet search engines similar to the campaign it previously waged against Netscape's Navigator browser," Massachusetts deputy attorney general Glenn Kaplan told the US judge last month.

Google itself had no comment.

The Commission will not say whether its impending decision aims to change Microsoft's approach to all would-be competitors, or is restricted to audio-visual software.

Microsoft is sure to take any negative decision to court if there is no settlement, but both sides are still talking. The company defends its policy of bundling software together as a way of improving consumer products.

Cars improved when manufacturers bundled in headlights, heaters, radios and air conditioners, it argues. Cell phone makers have started bundling in cameras.

Law enforcement authorities say there are two big differences between those examples and the Microsoft monopoly.

Car makers are not monopolies and their bundling did not head off a threat to their business, as no one thought headlamp producers would make cars to compete with General Motors.

But Netscape and RealNetworks threatened to become competitors to Microsoft and some say Google might do the same.

US courts found that Microsoft feared word processors, spreadsheets and other software would one day run on Netscape, making it the favoured operating environment.

Netscape in turn might have run on Windows, Apple or Linux, ending the Microsoft operating system's monopoly - if Microsoft had not acted as it did.

Microsoft discouraged computer makers from distributing Netscape, withheld technical information and bundled Internet Explorer, its riposte to Netscape, with Windows.

"Microsoft's internal documents and deposition testimony confirm both the anticompetitive effect and intent of its actions," a US court of appeals found unanimously, ruling that Microsoft broke the law to cripple the rival browser.

The Commission charged that Microsoft did the same against RealNetworks, citing "significant additional costs that tying (of Windows Media Player) imposes on Microsoft's rivals".

It has made similar charges regarding low-level servers.

A draft final judgment set for release this month or next lays out Commission reasoning but gives no figure for a fine and mentions no remedies, sources close to the situation said.  - (Reuters)