The European Commission has been investigating Microsoft since 1998, when competitors accused the company of failing to disclose hardware specifications necessary to integrate non-Microsoft software into corporate networks.
Last year the company said it would use its settlement with the US Government and nine states as its template for settlement with European regulators. That settlement gave manufacturers and customers the right to hide the Media Player icon from the desktop; but it stopped short of removing the code. But the Commission is free to ignore this proposal.
The Commission has gathered additional evidence from consumers, suppliers and competitors including, earlier this year, record and film companies. According to the Commission, its evidence confirms the earlier finding that Microsoft is leveraging its dominant position from the PC into low-end servers and that Microsoft's tying of Windows Media Player to the Windows PC operating system is anti-competitive.
The Commission said yesterday that its preliminary conclusion is that "Microsoft's abuses are still ongoing".
It has set out its findings and proposed remedies in a 'Statement of Objections', and will await Microsoft's response before making a final ruling.
According to the Competition Commissioner, Mario Monti:
"This Statement of Objections, which includes the identification of appropriate remedies, gives Microsoft a last opportunity to comment before the Commission concludes the case. We are determined to ensure that the final outcome of this case is to the benefit of innovation and consumers alike."
The question of remedies has been a difficult one for the Commission as, according to Reuters, an internal Commission review conducted earlier this year cast doubt on the enforceability of proposed alternative remedies.
But the Commission is confident. Commission spokesman Tilman Lueder is quoted by CNet News:
"At this stage, we have so much evidence and we are in possession of such substantive a file that we believe any decision we take will withstand scrutiny of the European court".
The Commission says that, provisionally, it is prepared to order that Microsoft reveal the necessary source code to allow rivals such as Sun Microsystems to achieve full interoperability with Windows PCs and servers, and thus – in theory at least – compete on a level playing field.
With respect to tying, the Commission has set out two alternative proposed remedies. The first would be the untying of Windows Media Player from Windows, whereby Microsoft would be required to offer a version of Windows without Windows Media Player included. This is a normal remedy for a tying infringement.
The second would be a "must-carry" provision, whereby Microsoft would be obliged to offer competing media players with Windows. Both solutions seek to ensure that consumers have a fair choice of media players.
The Commission also has the power to fine Microsoft up to 10% of its global turnover – a turnover that amounts to around $30 billion.
Microsoft spokesman Jim Desler is quoted by AFP as responding:
"We will not speculate on possible outcomes or suggested remedies of the commission but will continue to focus our efforts on responding to the commission's concerns."