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EU antitrust probe into Win2k threatens MS core strategy

Strikes at heart of integration and leverage policies

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MS new Trial? Today's announcement of an EU antitrust investigation into Windows 2000 presents Microsoft with a potential nightmare scenario, and ends Europe's policy of 'armed neutrality' when it comes to Redmond. Although sporadic complaints have emerged in individual European countries, the European Commission has for the past couple of years been determinedly sitting on its hands in accordance with its arrangement with the US antitrust authorities, who were until today lead member on Microsoft. So it's bad news for Microsoft that EU competition commissioner Mario Monti is now breaking ranks, before the DoJ has completed its action, and its possibly even worse news that Brussels is focussing on Win2k. The US government antitrust action deals entirely with past sins, while Monti's "examination into certain new features of Windows 2000," and the way in which these features "only permit Microsoft products to be fully interoperable" will be rooting around in the entrails of the product Microsoft's CFO has only just said the company is betting the ranch on. The EU investigation is covering far broader territory than the DoJ took action on. The US antitrust case is dependent on establishing that Microsoft has a monopoly of the "relevant market," i.e. the PC market, showing that it abused its position there and proving that it has harmed consumers thereby. Microsoft's use of its power to leverage its way into other markets where it hasn't a monopoly, or even where its presence is negligible, makes colourful copy but isn't of any material use to the DoJ case. Depending on how you see the future, that could make the DoJ case irrelevant, because if whole new markets make the PC market look like a tiny ghetto, then Microsoft is effectively just king of the dung-heap. Microsoft is however well aware of this possibility, and is doing everything in its power to get its server software into a commanding position in the ASP and wireless markets. Monti says it would be "hugely premature" to talk about possible European remedies against Microsoft, but he already seems to have a view as regards what Microsoft is up to with Win2k. The company, he says, has designed Win2k "in a way which may permit it to leverage its dominant position in PC operating systems into operating markets such as server operating systems and e-commerce." And by implication there's a tipping of the hat towards a possible remedy: "Microsoft's competitors, which do not have access to the interfaces, would... be put at a significant competitive disadvantage." So Monti's investigation is looking at tying in several directions, within the product itself and with Microsoft products on other platforms, how this could be used to leverage from one platform to another, and how Windows APIs could be used to screw up the competition. It's not clear whose complaints Monti is acting on, although one was apparently made by Sun last year; we presume that despite Active Directory it couldn't be Novell, which has just started making 'be nice to Microsoft' noises again, and it's not clear which features (or how many) of Win2k the investigation will be looking at. But there was one last grenade for Microsoft. At the press conference this afternoon Monti was asked if Microsoft could be forced to delay the launch of Win2k. This, he replied, was a matter for the company to decide. Win2k launches in eight days time, so this sounds rather like a very large 'do you feel lucky, punk?' ®

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