Microsoft Rivals Spur Review by EU

European Union regulators are examining complaints that Microsoft Corp. intentionally engineered a scaled-down version of its Windows operating system so it wouldn’t work as well with rival products.

An EU official, speaking on condition of anonymity, said Microsoft rivals were alleging that the version, stripped of Microsoft’s music and video player at the EU’s behest, might not work as well with other software.

The EU antitrust office, however, said tests were continuing.

“We are still in the process of examining the results of market testing on the requirement that Microsoft offers a fully functioning version of Windows without Media Player,” EU antitrust spokesman Jonathan Todd said.

A year ago, Microsoft was ordered to produce a version of Windows without a media player to European customers after regulators ruled that Microsoft abusively wielded its Windows software monopoly to lock competitors out of the market. Microsoft also was fined a record $665 million and ordered to share some software blueprints. The Redmond, Wash.-based company is appealing.

Dave Stewart, deputy general counsel with Seattle-based RealNetworks Inc., said the proposed version of Microsoft’s scaled-down Windows system removes technology that makes it easy for media files to play from within another product.

Stewart said that was just one of several ways in which Real believes Microsoft is not complying with the EU’s order. Real makes multimedia software and has sued Microsoft for alleged monopolistic behavior.

“The [European] Commission’s decision required Microsoft not only to remove the Windows Media Player but also to ensure that the unbundled operating system is ‘full functioning.’ It appears that Microsoft has made no attempt to do that,” Stewart said.

Microsoft spokesman Jim Desler did not dispute that the version of Windows without its media player technology does not work as well as the full version. But he said the company had to remove certain technology to comply with the European Commission’s order, and did not do so to intentionally stop competing products from working as well.

“We removed the code that the commission requires us to remove,” Desler said.

Desler added that the company was still waiting for more formal feedback from the commission.

The latest spat over the scaled-down Windows version further compounds problems for the software maker in its standoff with the EU.

Last week, regulators threatened Microsoft with new fines if it didn’t make it easier and cheaper for competitors to see the blueprints of its server software. That part of the ruling is aimed at helping rivals’ products better communicate on networks with machines that run Windows operating systems.

Microsoft has said that a Windows version without Media Player had reached manufacturers but wouldn’t be shipped to computer retailers until it resolved a dispute with the EU over the product’s name. The EU rejected Microsoft’s first choice, “Windows XP Reduced Media Edition,” deciding that it would discourage sales.

Now, the availability of the alternative product could be further complicated by the new complaints over how well the scaled-back version functions.

The EU has said it could impose fines of as much as 5% of the company’s daily global sales if Microsoft refused to cooperate.

Microsoft shares rose 19 cents to $24.18 on Nasdaq.