October 16, 1997 3:25 PM PDT

Microsoft investigated in Europe

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Joining a slew of federal and state investigations in the United States, the European Commission is probing a complaint about Microsoft's (MSFT) licensing practices.

Earlier this year, the commission sent a statement listing several objections to Microsoft after it received a complaint regarding the software giant's licensing practices. The software giant played down the issue when asked about it today.

"There is a lot less here than meets the eye," said Mark Murray, Microsoft's corporate public relations manager. "This issue before the European Commission involves a year-old dispute between Microsoft and another company. The dispute involves a nine-year-old contract which is unrelated to either the Internet or Windows."

The case raises questions of international jurisdiction, which have become increasingly important in the high-technology industry with the explosive growth of the Internet and related businesses. Just last week, for example, the European Commission forced Digital Equipment (DEC) to change its supply and pricing of software and hardware after an antitrust investigation.

Microsoft expects its case with the EC to be resolved fairly easily, said Murray, who refused to give the name of the other company involved or more details about the contract. He did confirm, however, that Microsoft had received a statement of objections from the EC and that the Redmond, Washington, company provided a response.

"We receive requests for information from regulatory bodies on a fairly routine basis, like any large company operating in Europe would," Murray added. "Most of the time we provide them with the information and never hear back from them again."

It was unclear whether the case was related to other matters under investigation by the Justice Department, which is conducting its own investigation into Microsoft's business practices. "We have an active investigation of Microsoft," department spokeswoman Gina Talamona said. "We are aware of the EC's investigation, and they are aware of ours."

The EC and Justice cooperated in an investigation that resulted in a 1994 settlement under which Microsoft ended certain licensing practices. The investigation was triggered by a complaint from Novell (NOVL), a U.S. software firm.

Novell complained in 1993 that Microsoft blocked competitors out of the market for operating system software by way of certain anticompetitive practices. It criticized Microsoft's standard agreements for licensing software to PC manufacturers, which required payment of royalties based on the number of computers shipped, regardless of whether the computers contained preinstalled Microsoft software.

After intense negotiations, Microsoft agreed to change some of its license contracts through the year 2000.

Reuters contributed to this report.

 

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