Microsoft

European Union regulators said Wednesday that Microsoft can go ahead and start using its latest proposed "ballot screen," which will let new users of Windows choose which browser--or browsers--they wish to use.

The decision to let Microsoft "market test" the latest version would seem to mark the wrapping up of the latest antitrust skirmish with Brussels.

More than a decade after Microsoft first started including a browser with Windows, regulators said earlier this year that they had reached the preliminary view that such an inclusion violated European antitrust law.

In response, Microsoft initially said it would ship Windows 7 in Europe without a browser at all, seemingly challenging the logic of the decision by the European Commission, the executive arm of the EU. However, amid indications that such a move would not fly, Microsoft in July offered a proposal that more closely matched what regulators and competitors wanted--a ballot screen that lets users choose which browser or browsers they wish to install.

Since then Microsoft, regulators, and competitors have been going back and forth about how that screen would look and operate.

"The improvements that Microsoft has made to its proposal since July would ensure that consumers could make a free and fully informed choice of web browser," Europe's antitrust authority said in a statement. Among the changes since Microsoft's July proposal is the agreement by Microsoft to add more information before users select a browser. Microsoft will now first present users with a screen explaining what a browser is and will then offer "Tell me more" buttons for each browser.

Under the revised proposal, Microsoft would, through Windows Update, make available for five years in the European Economic Area a screen allowing users of Windows XP, Windows Vista, and Windows 7 to choose which Web browsers they want to install. PC makers will also be able to install competing Web browsers and, if they choose, set those as the default browser and disable Microsoft's Internet Explorer.

"The Commission's preliminary view is that Microsoft's commitments would address these competition concerns and is market testing Microsoft's proposal in light of these requirements," The EC said in its statement.

For its part, Microsoft said it welcomed the European Commission's decision.

"For Microsoft, today's decision is a significant step toward closing a decade-long chapter of competition law concerns in Europe," general counsel Brad Smith said in a statement.

Update: Smith also spoke to CNET about the deal and its potential impact on others in the industry. Click here to read that interview.

European antitrust regulators have granted Microsoft's request to extend the deadline for responding to allegations that the company violated antitrust laws, setting a new deadline of April 21.

The European Commission in mid-January notified the software giant that it objected to Microsoft bundling its Internet Explorer browser in with its operating system.

Microsoft was initially given two months to respond in writing to the allegations, but requested additional time.

A spokesman for the European Commission said it's not usual for companies to request and receive extensions to their response to the Commission's statement of objections.

Since the Commission put Microsoft on notice of its objections, the software giant's arch-rival Google requested to be a "third party" to the proceedings, which will entitle it to review documents Microsoft presents in the case that are not otherwise available to the public. Like Google, Mozilla also requested third-party status in the case. Mozilla is the organization behind the popular Firefox browser.

In addition to a written response to the Commission's statement of objections, the software giant will also be allowed to request an oral hearing on the matter.

The European Commission has said it will stop actively monitoring Microsoft to check that the software maker is complying with a 2004 antitrust ruling.

In 2005, the Commission appointed an independent trustee to assess whether Microsoft was supplying interoperability information for Windows with workgroup servers to software rivals. The Commission told CNET News sister site ZDNet UK on Wednesday that it will no longer require a full-time monitor, and that it will use "ad hoc assistance" to provide it with advice on any issues arising from the ruling.

"We don't think it's necessary to have a full-time trustee any more, as there have been changes in Microsoft's behavior, and third parties can exercise their rights before national courts," said Commission antitrust spokesman Jonathon Todd.

While the trustee has been removed, Microsoft still has an obligation to supply complete and accurate interoperability information, the Commission said in a statement. However, the agency said it is satisfied that the original set of interoperability information has been documented by Microsoft, and that Microsoft's license agreements for third parties are sufficient to allow those parties to make cases in national courts, should any disagreements arise.

Microsoft was required to supply interoperability information to competitors following a 2004 ruling by then-competition commissioner Mario Monti. In addition to the workgroup server software interoperability issue addressed by the monitoring, the antitrust decision covered anticompetitive concerns to do with Microsoft's bundling of Windows Media Player with Windows. In its decision, the Commission not only required that the interoperability information be made public, but also called for the unbundling of Windows Media Player and fined Microsoft 497 million euros ($629 million).

In 2008, the Commission fined Microsoft again, levying 899 million euros for failure to comply with the 2004 decision. Todd said that Microsoft has paid the fine, but that the money is currently being held in an account, gathering interest, pending the outcome of an appeal against the fine by Microsoft.

Other Commission antitrust investigations relating to Microsoft, including one into Web-browser market dominance, are still being conducted.

Tom Espiner of ZDNet UK reported from London.

Updated at 8:33 a.m. PST January 17, with comments from Opera and antitrust attorneys in Brussels.

European regulators notified Microsoft it believes the software giant is in violation of the region's antitrust laws by bundling its Internet Explorer browser in Windows, the company said Friday.

The European Commission, which received that Microsoft was using its market dominance in bundling IE into the Windows operating system, opened its investigation into the tying issue last January.

According to a statement issued by the European Commission:

The evidence gathered during the investigation leads the Commission to believe that the tying of Internet Explorer with Windows, which makes Internet Explorer available on 90 percent of the world's PCs, distorts competition on the merits between competing web browsers insofar as it provides Internet Explorer with an artificial distribution advantage which other web browsers are unable to match.

The Commission is concerned that through the tying, Microsoft shields Internet Explorer from head to head competition with other browsers which is detrimental to the pace of product innovation and to the quality of products which consumers ultimately obtain.

In addition, the Commission is concerned that the ubiquity of Internet Explorer creates artificial incentives for content providers and software developers to design websites or software primarily for Internet Explorer which ultimately risks undermining competition and innovation in the provision of services to consumers.

A spokesman for the commission declined to comment on whether there has been any discussion on whether Microsoft would offer a version of Windows with the browser and one without, much like it did after the Commission ordered it to separate its Windows Media Player from its operating system and offer a version with and without the operating system.

A spokesman for Microsoft declined to comment, noting it would not make statements beyond its press release.

Microsoft, in response to the Commission's statement of objections, said:

We are committed to conducting our business in full compliance with European law. We are studying the Statement of Objections now.

Microsoft will have two months to respond in writing to the European Commission's objections and also will be given an opportunity to request an oral hearing. After assessing Microsoft's written and/or oral response, the commission will issue a final decision on the matter, which could include a fine, an enforcement order, or a remedy.

Microsoft, meanwhile, further noted in its statement that the commission indicated in its "statement of objections" that the remedies put in place by the U.S. courts in 2002, following antitrust proceedings in Washington, D.C., do not make the inclusion of Internet Explorer in Windows lawful under European Union law.

In reacting to the commission's objections, rival browser maker Opera applauded the move.

"We think it is right of the EU for the sake of the consumers to be concerned about someone potentially misusing their competitive power," Chief Development Officer Christen Krogh told CNET News.

Antitrust attorneys in private practice in Brussels said the commission's "statement of objections," is not a light matter and is likely to pose challenges for the software giant.

David Anderson, an antitrust attorney and partner with Berwin Leighton Paisner in Brussels, said, "The commission's continued pursuit of Microsoft's tying of its operating system to Media Player and now Internet Explorer sends a clear signal to dominant companies in Europe: the commission is serious about exclusionary tying and bundling."

Anderson added, however, that if the commission ultimately requires Microsoft to offer a version of Windows with and without IE bundled in, pricing will play a key role.

The commission won the battle but lost the war on its Media Player order, said some antitrust experts. Microsoft was able to offer versions of Windows with and without the Media Player for the same price and, as a result, computer makers and users loaded the Windows version with the Media Player.

But while pricing may be a key issue if the commission opts to require Microsoft to unbundle IE, European antitrust regulators may be reluctant to demand such an order because it would require them to set pricing, and enforce and monitor adherence to the order, Anderson said.

One well-informed antitrust lawyer in private practice in Brussels said the commission would not likely require Microsoft to unbundle IE from the operating system, since that remedy did not work well with the Media Player.

Instead, the commission may consider proposing that Microsoft offer more than one browser with its operating system, noted the antitrust attorney.

And although some antitrust attorneys say they expect similar tying cases to arise with the commission and Microsoft, this antitrust attorney disagrees.

"The commission will only go after the really important applications that result in platform monopoly maintenance, in the long term," said the antitrust attorney.

The attorney cited Microsoft's Windows, IE, and Office, as well as its server operating software, as examples of a platform monopoly. And, more recently, the attorney said Microsoft is looking to the Internet as its next platform for Web applications that will be made dependent upon Windows to run and look their best.

The European Committee for Interoperable Systems raised the same issue, noting in a statement:

By tying Internet Explorer to Windows and using proprietary IE standards, and making Web applications and Web content dependent on Silverlight and .Net, Microsoft seeks to establish itself as the Web's gatekeeper.

Meanwhile, Anderson noted that Microsoft may also face an emboldened commission staff, given the same set of attorneys who won the Media Player case before the European Court of First Instance are the same ones overseeing the IE issue.

A Dutch software dealer has filed a complaint against Microsoft with the European Commission, arguing that the company's pricing policy in Europe violates antitrust laws.

Company owner Samir Abdalla's complaint is that Microsoft charges at least a third more for its software in Europe than it does in the U.S. Abdalla's lawyer, Gerard van der Wal of the Houthoff Buruma practice, said his client had begun a legal proceeding "this week" and was seeking clarification from the commission.

"At this stage, we are asking the court to accept that there has been a violation of the relevant European law," he told ZDNet UK on Friday. "Clearly, the commission does not enter into a discussion at this point."

According to Abdalla's lawyers, the price difference between Europe and the U.S. is between 30 percent and 50 percent. "The evidence is fairly clear," van der Wal said. "There is a huge price difference, and Microsoft uses its intellectual property to control that."

Abdalla is already engaged in legal proceedings with Microsoft. In May, Microsoft sued Abdalla as principal of the Dutch company HW Trading, alleging he had received more than $3.7 million (2.4 million pounds) from the illegal sale of unlicensed Microsoft software in the U.S.

The lawsuit, filed in California Central District Court, claims Abdalla took advantage of an Egyptian government program that provides low-cost software to citizens. Abdalla allegedly exported the software in that scheme to U.S. dealers and replaced it with counterfeit software in Egypt.

In response to that complaint, Abdalla has accused Microsoft of stifling trade in the so-called "gray market," which he argues is legal under European law. The gray market usually describes a market where goods, such as software, can be bought and traded freely even though a supplier has tried to ensure that the goods are only used in the country for which they are intended.

As for the current legal proceedings, van der Wal said he hopes the evidence will be put before the commission, "and we will go from there." He said he expects it will take "a few weeks" before the case can move any further.

Colin Barker of ZDNet UK reported from London.