Microsoft looks close to settling EU browser case, prepares to smooth way for Yahoo deal

EU finally about to settle Microsoft browser case

REDMOND, Wash. — Microsoft Corp., which has already shelled out $2.5 billion in antitrust fines in Europe, is on the brink of closing a chapter in its long-running battle with regulators there, just in time for another to begin.

European regulators said Wednesday they were preparing to settle their investigation into the way Microsoft includes its market-leading Internet Explorer Web browser with the Windows operating system. Competing software makers had complained PC users didn’t have a clear way to choose a browser that challenges Internet Explorer, and the European Commission concluded in January that Microsoft was violating antitrust laws.

Now, the regulators in Brussels say they will move forward with a proposal made by Microsoft in July that aims to give Windows users in Europe a better tool for choosing different Web browsers.

At a news conference at Microsoft’s headquarters Wednesday, the company’s general counsel, Brad Smith, said the EU announcement was a big step toward ending the company’s antitrust conflicts in Europe.

It also will free Microsoft’s legal team to push the software maker’s search deal with Yahoo Inc. over regulatory hurdles. In July, Yahoo agreed to let Microsoft handle its Web searches as part of a 10-year deal. Regulators in the U.S. and Europe will be looking into whether the deal will inhibit competition in the market for online advertising.

The EU-Microsoft agreement came about after meetings between Smith, who led the negotiations, his team of lawyers, and top European Commission regulators. Microsoft and the regulators also held about 20 videoconferences between Redmond and Brussels in the last few months, Smith said.

Microsoft first tried to satisfy regulators’ concerns about the browser by offering to sell the forthcoming Windows 7 with no browser at all, but the EU rejected the plan, saying it offered less choice for PC users, not more.

Microsoft came back with a second proposal: to show EU users a prominent screen from which they could choose from a list of several browsers. The proposal was modified during talks between the software maker and regulators, and now includes a screen explaining what Web browsers are. PC users can click a “tell me more” button for details.

Users of Windows XP, Vista and Windows 7, which is due to launch Oct. 22, can then pick several browsers — listed in alphabetical order — to install along with or instead of Internet Explorer. They can come back to that screen later to change their browser choice.

Most people get their browsers pre-installed by a computer maker such as Dell Inc. or Hewlett-Packard Co., which under the proposal would be free to pick non-Microsoft browsers and disable IE. Even if a computer comes with Internet Explorer on it, however, users are free to download rivals such as Firefox, Apple’s Safari or Google Chrome off the Internet.

Web browsers are free, so they don’t directly make money for Microsoft or any other software maker. But Web browsers are important for branding, and for giving companies a way to better control their users’ experience on the Internet. For example, Google released the Chrome browser so it could ensure a smoother performance of online software applications it offers.

Regulators said the proposal must clear several more steps before PC users will see the browser-selection option in action, but that won’t hold up the release of Windows 7 in Europe. The European Commission said it will now formally request feedback from computer manufacturers, software companies and consumers. They have a month to respond.

If all goes well, Microsoft said the browser-choice screens would be pushed out to PC users across the EU. The new software in most cases will be installed through the automatic tool that distributes security fixes and other updates.

“Microsoft’s commitments would indeed address our competition concerns,” Kroes said Friday. The proposal “would empower all current and future users of Windows in Europe to choose which browser they wished to use.”

Microsoft also committed to share more information with software developers for the next 10 years to help them make products compatible with Windows and key pieces of software used in businesses: Windows Server, Office, Exchange and SharePoint. Microsoft agreed to make sure its technology is built using industry standards, after years of complaints from rivals about its proprietary choices for Web browsers and document formats.

Thomas Vinje, legal counsel for a group of companies that complained about Microsoft’s business methods, said the settlement does not seem to deal with the flawed way that Microsoft applies standards, its unfair pricing practices or other concerns about patent abuse or standards manipulation.

AP Business Writer Aoife White contributed to this report from Brussels.

On the Net:

Microsoft offer:

www.microsoft.com/presspass/press/2009/oct09/10-07Statement.mspx