Microsoft rejects accusations against Windows 2000

By Michael Mann (Reuters)

BRUSSELS, April 27 (Reuters) - U.S. software giant Microsoft Corp MSFT on Thursday dismissed suggestions that its Windows 2000 operating system breaks European Union competition rules.

Microsoft, already facing the threat of being split in two after antitrust problems in the United States, was responding to an investigation by the European Commission into whether Windows 2000 could give the company a stranglehold over server software and ultimately electronic commerce.

"Our competitors complained just before the launch of Windows 2000," John Frank, the company's senior director for European law and corporate affairs, told reporters.

"Regulators have to be deeply sceptical when competitors bring complaints. Their job is to protect consumers not to protect competitors. We're confident we'll be able to satisfy them."

The Commission in February launched a probe of Windows 2000 after complaints that Microsoft had designed parts of the new package in a way which would allow it to extend its dominance in personal computer operating systems to server operating systems and ultimately electronic commerce.

Through Windows 2000, Microsoft is alleged to have bundled its personal computer operating system with its own server software and other Microsoft software products "in a way which permits only Microsoft products to be fully interoperable," EU Competition Commissioner Mario Monti said at the time.

"Microsoft's competitors, which do not have access to the interfaces, would therefore ... be put at a significant competitive disadvantage," he said.

U.S. LEGAL PROBLEMS

The EU probe comes at a difficult time for Microsoft. A U.S. judge ruled on April 3 that the company had violated U.S. antitrust laws by abusing a monopoly it held in personal computer operating systems.

The states involved in the case are expected to join the federal government on Friday in calling for Microsoft to be split in two, according to sources familiar with the case.

Responding to the Commission's allegations, Microsoft's technical experts denied there was anything to prevent other systems being linked with Windows 2000.

They said the majority of e-commerce would continue to be Internet-browser based, which need not necessarily entail consumers being tied purely to Microsoft operating systems.

"Interoperability is a fact of life," said Frank Artale, general manager, Microsoft and a member of the Windows 2000 development team since 1994.

"Our transactioning system has interfaces to allow others to plug in. You'd be hard pressed to find a system with which Windows 2000 can't interoperate. It wouldn't make any sense for us to design it that way."

Artale said other software developers had enjoyed access to the Windows 2000 code and software since 1996.

Frank declined to specify the type of information the Commission had requested from Microsoft to allow it to decide whether to deepen its probe into the legality of Windows 2000.

"We've had questions from the Commission, but it hasn't put forward a theory or articulated particular concerns. We don't know what's behind the questions," Frank said. "We expect the Commission to come back with additional questions."

If the allegations against Microsoft were proven, the Commission could force the U.S. software giant to make changes to Windows 2000.

Under EU rules, if the company refused to come into line it could face fines of up to 10 percent of its worldwide revenues, although such a large fine has never been levied.