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Will MS cut a deal with Europe over WinXP?

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Is the European Commission investigating Windows XP, or isn't it? Or, is it considering whether to investigate it, or isn't it? Yes and no, according to authoritative EU sources this week.

In fairly short order we've had claims of a preliminary enquiry (in a Financial Times story yesterday), an apparent denial, and then confirmation of informal contacts. This is par for the course for the European Commission, which has been setting new benchmarks for unconvincing denials and counterspin recently, but the point about the XP 'contacts' is that the process seems to have been initiated by Microsoft.

Commission spokeswoman Amelia Torres said yesterday that Microsoft had invited the Commission to comment on XP in May, that the Commission had then submitted questions about the new OS to the company, and that Microsoft had replied. This appears to explain how the Commission can have been simultaneously asking preliminary questions about XP and not formally investigating it. This is not a formal Commission process, hence, there is no formal investigation.

The EU documentation that has leaked from the current investigation does however make an investigation into XP look extremely likely. The Commission's statement of objections, which Microsoft is currently preparing an answer to, claims Windows 2000 server software has been designed to exclude rivals and that products like Media Player have been illegally bundled in order to establish a monopoly. The statement doesn't mention XP, but it seems obvious that if this is what the Commission thinks about Win2k, it's going to think it more so when it gets around to thinking about XP officially.

Microsoft's starting the ball rolling by asking the Commission to ask about XP was therefore a realistic move, possibly even a very smart one. When the Windows 2000 investigation concludes it's probably going to hurt, but by the time it does so Microsoft will be well advanced in switching the world over to WinXP. WinXP is now the big one, and the last thing Redmond needs is for it to get into Brussels' crosshairs.

If Microsoft hadn't asked for informal comment on XP, then it's quite probable that the new OS would have been rolled into the investigation already. We do not know, yet, what the Commission's questions and Microsoft's answers were, but it seems likely that the Commission will at some point ask for modifications. What it asks for will depend on how hard it comes down on Microsoft in the current investigation, but as Microsoft is apparently being ultra co-operative over XP (whereas it's accused of being misleading over Win2k), any mods (such as making Instantly Messenger, Passport and Media Player less compulsory) might be done voluntarily without public sabre-rattling from the Commission.

Microsoft has done this in the past with the EU (over OEM licensing and ISP deals, for example); if it pulls it off this time the dogs could conceivably go back to sleep again, after they've exacted their pound of flesh for last year's OS. ®

Related Stories:
Leaked EU papers signal guilty verdict, vast fine for MS
MS-Gov talks fail, mediator appointed

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