Rivals turn on the heat against Microsoft

BRUSSELS: A Microsoft Corp. rival used show-and-tell to make its point that the software giant need not cripple its popular Windows operating system to comply with EU regulators' demands, a source familiar with the case said.

The demonstration came on the last day of a three-day hearing to help the European Commission decide on charges that Microsoft abused its dominance over personal computer operating systems through Windows, found on over 90 percent of computers.

There will be no immediate results from the highly publicized but confidential hearing which followed a predictable pattern with Microsoft defending itself against competitors' complaints about its business practices. Eventually, European Union hearing officer Karen Williams will send her evaluation to Competition Commissioner Mario Monti who will use it to help him rule after a five-year probe.

The European Union executive is expected to decide by the end of June 2004, but if Microsoft objects it could start a lengthy appeal to the EU's top court in Luxembourg.

LEVEL PLAYING FIELD

The Commission has proposed that Microsoft offer a version of Windows without Media Player audio-visual software built in, so that rivals would be on a level playing field. In particular, it focused on rivals RealNetworks Inc. RealPlayer and Apple Computer Inc.'s QuickTime.

The EU may also impose a hefty fine on Microsoft.

Microsoft argues that if it were ordered to cut out Media Player it would be forced to offer a substandard version of Windows which would be unable to run many popular programs.

Both the manner and substance of Microsoft's warning made an out-of-court settlement seem more distant, a Microsoft critic following the case said. "Microsoft is grateful for the opportunity to present its case to the European Commission and National Competition Authorities," the Redmond, Washington-based software maker said in a statement issued at the end of the hearing.

"In some areas we have identified opportunities to narrow the differences between us... Microsoft recognizes that as an industry leader it has a special responsibility to consumers, the industry and the Commission to work things out," Microsoft said.

RealNetworks demonstrated a version of a product known as "Windows XP Embedded" to show the operating system could work well without Windows Media Player, a source familiar with the case said. The product seemed to work fine to many of those sitting in the hearing room, the source said.

Microsoft's Web site says XP Embedded is software to let developers select only the features they need and is a single-purpose product used for such items as ATM cash machines.

"Microsoft does not license the embedded operating systems for use on a general purpose computer," it says on its Web site (http://www.microsoft.com/windows/Embedded/faq/default.asp).

RealNetworks also took issue with statistics offered by Microsoft to show that a number of makers of personal computers put RealPlayer on their products. RealNetworks said that the computer makers put RealPlayer on only a very tiny percentage of their products, the source said.

SAME ARGUMENTS

RealNetworks also said that the arguments and the approach used by Microsoft to help defeat it were identical to the approach used to defeat Netscape's browser software Navigator in the 1990s, the source said.

U.S. courts found that Microsoft violated antitrust laws there, using illegal practices to favor its own Internet Explorer software.

Meanwhile in London, Microsoft's chief executive officer for Europe, Middle East and Africa, repeated the company's desire to settle the European Union case.

"We want to resolve this case. We want to put this behind us. That's the purpose of the hearings this week," Jean-Philippe Courtois told journalists on Friday on the sidelines of a new technologies seminar.

© Reuters