EU Questions Legality of Windows 2000
Microsoft Corp., already grappling with a U.S. government antitrust lawsuit, faced more legal woes Wednesday after the European Union launched a probe of the software giant’s new $1-billion operating system.
The investigation will look at whether Windows 2000 breaks EU competition law by allowing Microsoft to unfairly extend its dominance in personal computers to servers--the workhorse machines that are the foundation of the Internet and business networks.
EU Competition Commissioner Mario Monti said in Brussels that the complaints allege Microsoft bundled the operating system with other software in such a way that only its own products are fully interoperable, and that puts rivals at a disadvantage.
The complaint, brought by users, small computer businesses and Microsoft rivals, alleges that by controlling the network server computers, Microsoft could ultimately have a powerful grip over electronic commerce and the Internet economy.
Microsoft defended the system, saying it was confident the EU would find it had complied with competition law, and said the case would not hold up the roll-out of Windows 2000.
“We have no reason to think that this will have any impact on the launch of Windows 2000, or any impact at all, eventually,” Microsoft spokeswoman Erin Brewer said by telephone from company headquarters in Redmond, Wash.
Microsoft general counsel for international sales and support Brad Smith said Windows 2000 is interoperable with other server operating systems.
“We have shared a wide array of technical information about Windows 2000 broadly with software developers, customers and competitors long before the product was ever released,” Smith said in a statement.
If the allegations are proven, the EU’s executive commission said, it could force Microsoft to make changes to Windows 2000 or face fines of up to 10% of global revenues if it failed to do so.
Nearly a quarter of Microsoft’s second-quarter revenue of $6.1 billion came from Europe, up 14% from the same period a year earlier.
The probe cast a shadow over the long-awaited launch of Windows 2000, which Microsoft touts as a more stable and secure platform for business and network computers, and which is set to be unveiled Feb. 17 by Microsoft Chairman Bill Gates.
It is also the latest legal headache for Microsoft, which is defending itself from a U.S. Justice Department lawsuit alleging it abused monopoly power in operating systems to crush rivals and stifle competition.
Shares of Microsoft fell $5.94, or 5%, to close at $104 on Nasdaq.
Analysts said it was too early in the probe to tell what the impact might be on the company, but noted that with its bulging war chest Microsoft would have little trouble fighting a second legal front.
The EU’s Monti said a formal request had been made to Microsoft to supply the commission with information by the beginning of March.
Microsoft said it looked forward to doing so.
