Perhaps the next time Brad Smith heads to Brussels, it will be for a vacation.
After years of wrangling with Microsoft, the European Commission announced an accord with the software giant Wednesday on several fronts that seems poised to put an end to its antitrust concerns with Redmond.
Brad Smith
(Credit: Microsoft)In the wake of the announcement, I spoke to Smith, Microsoft's general counsel, about the decision, what it means for the future of Windows, and whether the company sees its spot on the antitrust hot seat now being taken up by other companies, including Google.
Here's an edited transcript of our conversation:
Q: Is this really it as far as Europe is concerned?
Smith: This is definitely a major milestone for Microsoft. Today's announcement reflects a broad set of agreements that really address a wide array of issues. At the same time, we obviously need to keep our eye on the ball. Antitrust issues will continue to be important for us, just as they are going to continue to be important for a number of other leaders in our industry. We're going to have to do an excellent job implementing these agreement. We are going to have to do an excellent job addressing any new issues that arise in the future. Having said all that, I also think it is fair to say, as Commissioner [Neelie] Kroes did when she spoke in Brussels, this does represent the closing of one chapter and gives us the opportunity to open a new chapter. We're definitely enthused about that opportunity and we're committed to ensuring the next chapter is a positive and constructive one.
One of the things that Steve Ballmer talks a lot about in terms of antitrust issues is getting legal clarity on what one can and can't do. Do you feel like you now have that understanding with the EU?
Smith: I think this gives us a great deal more clarity. I think it gives the industry as a whole more clarity. It's perhaps most helpful in the area of interoperability because it really implements a new framework. It applies to a broad array of Microsoft products--Windows, Windows Server, Exchange, SharePoint--and for all of these products it has certain principles that we have to adhere to. It addresses the way we implement file formats.
At the same time, no advance on any single day can ever answer all questions for all companies for all time.
Essentially the EU has said through its very objections that you can't put a media player in Windows and you can't put a browser in Windows. What do you feel Microsoft can include in future versions?
Smith: There are two things to think about. First is what gets included in Windows, and second, what's the right way to address something that is included.
Our basic approach is to include in Windows, software that has APIs (application programming interfaces) that will be beneficial for other applications to call on and use. The browser is definitely an example of that. It's quite probably even more important in that role today than it was, say, when the browser issues first arose in the 1990s. The media player plays a similar role in terms of some broad APIs that are used by a wide variety of other applications.
There are other things that we have put in Windows in the past that don't necessarily involve the same role. A good example of that is Windows Live Messenger. We had Windows Messenger in Windows XP. It's not in Windows Vista or Windows 7 We're trying to make thoughtful decisions about what is included.
Then the second question that arises is how do things get included. How do we document APIs that our browser is using so that other browsers can use them as well? That's part of the U.S. consent decree.
How do we ensure that [computer makers] have flexibility to offer competing choices? How do we ensure that consumers are aware of competing choices and can use them if they wish. That latter part is an area where different governments have chosen different approaches at different times. The U.S. Department of Justice chose one approach in its consent decree. The Korean Fair Trade Commission chose a second approach. The European Commission in the media player case in 2004 chose a third approach. Today's announcement on the browser reflects the European Commission choosing a fourth approach.
Some people have the opinion that as a result of these different antitrust issues, Microsoft really finds itself with one hand tied behind its back as it competes in the battles of today. Do you believe Microsoft in the current antitrust environment competes on an even footing with some of the other Internet giants?
Smith: I do believe it is very important for all technology leaders in our industry to follow the same laws and obey the same rules. The rules don't necessarily apply in the same way when a company has a small market share as it does when a company has a large market share. But there are a number of companies that have large market shares for very important products. We've taken a number of steps to get into line with new legal rules in this field. The law has evolved and we've needed to evolve to address these new obligations.
We do believe our competitors need to play by the same rules. They've often been at the forefront of asking regulators to evolve the law in new directions. Now that the regulators have done so, we believe they need to pay attention as well.
Do you anticipate a period of time over the next few years where Microsoft is more likely to be the subject of antitrust inquiries or the company on the other side of the table for a change?
Smith: I think that we have addressed a very wide array of issues. Perhaps, in part because we were the first company to have to go through these inquiries, at least since the dawn of the PC era. We've probably had to go farther and sooner than other companies have had to do. We're now in an era where a different company seems to be in the headlines for competition law issues, if not every day, at least every month.
I think that what we are going to see in the next decade is this field of law being applied to a wide number of technology leaders that have high market share. We're going to see that, not only in Washington and Brussels, but we're likely to see that in more countries around the world simply because the global economy has evolved.
Have you expressed concerns specifically to Europe or Washington, D.C., about some of Google's behaviors?
Smith: We were very transparent last year when Google entered into its agreement with Yahoo. We felt that that was an illegal agreement that Google had entered into for the sole purpose of preventing Microsoft from becoming a more successful competitor, together with Yahoo, in the search space.
It was only when the Department of Justice informed the parties that it was on the verge of filing suit that Google decided to drop that agreement. We have not been shy about raising concerns when we have them.
It was only a couple hours after you guys settled with Brussels that we heard from D.C. with regards to Intel. When you initially heard that the FTC was filing suit against Intel, did you have feelings of empathy toward what their lawyers are going through, or what were your initial reactions?
Smith: I obviously know from a lot of firsthand experience the challenges that arise when a company needs to address these kinds of issues. Our road was a long one and it had its share of difficult moments. Antitrust issues are never easy for company to address.
This isn't a case where Microsoft has taken a public stance or even voiced to the regulators a position, is it?
Smith: We have not taken any public or nonpublic positions on the issues.
Are you guys looking to reach an agreement with Plurk? You guys said that you used code you shouldn't have? I'm curious if you are trying to negotiate some sort of settlement with them?
Smith: I wouldn't want to say anything that goes beyond the public statement we put out.
It does seem when I look at any particular issue with regards to the Internet, Microsoft tends to have a much more cautious approach. It seems like it is tough to compete when others are bundling more than you.
Smith: I think our goal is to be thoughtful but also fast-moving. As we look at the Internet today, it is increasingly a regulated space. That wasn't the case a decade ago. I think a thoughtful company needs to really think through how its products and services are going to comply with the regulations that are going to be enforced or likely to be applied in many different countries around the world. At the same time, one cannot let that get in the way of moving forward quickly. I think it's striking that balance that is really quite important. One needs to move fast. One shouldn't move faster than speed of thought and yet one shouldn't be so thoughtful that one simply analyzes problems and fails to solve them.
Do you think Microsoft has erred a little too much on side of caution in recent years?
Smith: I don't know that we've erred too much on the side of caution, but I do think it's extremely important we move quickly. This is a very dynamic space it is certain to remain a very dynamic space. Customers are interested in deploying new products and services, whether it is on the client, on the server, or on the cloud. The real key is to develop the capability to be both thoughtful and fast moving.
Microsoft's top lawyer said that a tentative agreement with Brussels announced earlier Wednesday could potentially allow the software maker to move out of the regulatory crosshairs, perhaps paving the way for regulators to shift their attention elsewhere.
"It's important for us to get closure in Europe on issues that have obviously been controversial for over a decade," General Counsel Brad Smith said in an interview. "Today's decision takes us an important step closer to doing that."
Smith
(Credit: Microsoft)Microsoft initially took a much different approach to the European Commission's assertion that the inclusion of a browser in Windows violated antitrust law. The company had initially proposed just stripping out the browser from Windows 7 entirely, leaving users the prospect of trying to get a browser on their own. The software maker eventually backed down after indications that that approach was unlikely to fly.
While not final, Microsoft's moves would appear to resolve all of its outstanding regulatory issues with the Commission and were greeted warmly by regulators on Wednesday.
Although most of the early attention focused on the agreement around a browser "ballot screen," Microsoft also announced on Wednesday an agreement around product interoperability. Under that deal, a 10-year commitment by Microsoft, the software maker agrees to publish communication protocols and adopt certain standards as part of Windows, Windows Server, Office and other high market share products. Companies could also purchase for 5,000 euros a warranty that would subject Microsoft to court oversight and monetary penalties if it doesn't live up to its commitments.
Smith said that the approach Microsoft took with regard to interoperability was designed to adopt methods that Nellie Kroes, commissioner for competition, had outlined in a speech last year for how companies with high market share products should behave.
"I actually think this in effect implements the model that the Commission has been advocating," Smith said. Moreover, he said it is a model that other software companies should pay attention to, he said, noting that there are lots of companies that have high market share. He noted that Google has 78 percent of the paid search market and IBM has 100 percent of the mainframe market, while Adobe also has dominant positions in certain areas, such as Photoshop.
"It is important we believe to create a level legal and regulatory playing field," Smith said. "Everyone that has a high market share needs to respect the same set of rules. I think a number of these rules are likely to be applicable to other companies and other products."
Settling now with Brussels also could help Microsoft in its effort to win approval for its search deal with Yahoo, Smith said.
"This certainly isn't going to hurt when it comes to the Yahoo-Microsoft agreement," he said. "It's not necessarily going to make a huge difference. We didn't feel a particular step was needed to help it along."
Microsoft is in the process of trying to ascertain whether the deal needs approval from Brussels or from individual European antitrust authorities. It also needs approval from U.S. regulators, who have asked for more information on the deal.
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.
Microsoft says it doesn't plan to ever ship a browserless "E" version of Windows 7, though that's still the version being offered by many of its European online stores.
(Credit: CNET News)With its plans now centered on creating a ballot screen where users can choose which browsers to install, Microsoft has no plans to ever ship the browserless "E" versions of Windows 7.
Curiously, though, the "E" versions are still listed for sale on several versions of Microsoft's European online store. Nor did the software maker have a clear explanation of why those versions are still listed, weeks after the company said that it would ship the same version globally.
Although the UK site seems to have it right, many of the non-English sites, including Spanish, Dutch, and German versions, list only the "E" or "N" versions of the operating system. As it did with Vista, Microsoft does plan to continue selling an "N" version in Europe, which has the media player removed.
"Microsoft is working to refresh its international online store sites, just like retailers are now," the software maker said in a statement. The fact that the "E" versions were still listed was first noted by enthusiast site AeroXP.
In any case, Microsoft is being clear that it has no plans to ship a browserless version--those that preorder the "E" version will get the standard version.
As first reported by CNET News, Microsoft told computer makers in June that it planned to ship Windows 7 without a browser in Europe to try to address regulators' issues. However, both competitors and regulators expressed concerns with that plan. Ultimately, Microsoft reversed itself and said it was open to the "ballot screen" idea where consumers can choose which browsers they wish to install.
Earlier this week, Microsoft said that it would end on September 1 an offer to European buyers to get the full version of Windows 7 for the upgrade price, a relic of the browserless plan in which Microsoft said it would sell only the full version of the operating system.
Microsoft said Monday that it plans in a week to end an offer that allowed those buying Windows 7 in Europe to get the full version of the operating system for the price normally charged for the upgrade version.
Those who want to pre-order the full version for the upgrade price have until Aug. 31 to do so, Microsoft said in a blog posting. After Sept. 1, users will be able to order an upgrade version or pay a higher price for the full version, which does not require an earlier version of Windows be installed.
(Credit:
Microsoft)
The discounted full version dates back to Microsoft's original plan to deliver Windows 7 in Europe in a special "E" version without a browser. At that time, Microsoft said it would not do an upgrade version, but would instead offer the full version of Windows 7 at upgrade pricing.
However, amid widespread criticism and indications the browserless options wouldn't fly with European regulators, Microsoft said last month it would scrap that plan and instead allow users in Europe to choose which browsers they want from a ballot screen.
Microsoft said it is still working out the details on that front. "I hope to continue to keep people updated on our ballot screen proposal as we have more to share," Microsoft blogger Brandon LeBlanc said in Monday's posting.
As for the pricing, it varies by country, but Microsoft said it will offer a discounted rate on Windows 7 Home Premium upgrades for the remainder of 2009.
For now, in Britain, for example, the full version costs 99 British Pounds ($162). After Sept. 1 and through the end of the year, Microsoft will sell the upgrade version for 79 pounds ($130), while the full version will sell for 149 pounds ($245). Next year and beyond, the upgrade will sell for 99 pounds and the full version will be 149 pounds.
Microsoft also said on Monday that it will extend, for a time, a family pack option for Windows 7 to eight European countries-- the United Kingdom, Ireland, Germany, France, Switzerland, Austria, the Netherlands, and Sweden. Microsoft already announced plans to offer the family pack in the United States and Canada.
In a reversal on Friday, Microsoft said it is now open to allowing users in Europe to select competing browsers in Windows 7.
Essentially, Microsoft is offering to put into Windows a way for consumers to easily install a rival to Internet Explorer. PC makers, as they can today, could still install a rival browser and could also disable Internet Explorer, if they choose.
"Under our new proposal, among other things, European consumers who buy a new Windows PC with Internet Explorer set as their default browser would be shown a 'ballot screen' from which they could, if they wished, easily install competing browsers from the Web," Microsoft general counsel Brad Smith said in a statement.
As first reported by CNET News earlier this month, Microsoft had hoped to comply with Europe's objections to the inclusion of a browser in Windows simply by removing the browser entirely from Windows 7. However, the European Union indicated that such a move might not satisfy its concerns.
"Under the proposal, Windows 7 would include Internet Explorer, but the proposal recognizes the principle that consumers should be given a free and effective choice of Web browser, and sets out a means--the ballot screen--by which Microsoft believes that can be achieved," the commission said in a statement. "In addition, (computer makers) would be able to install competing Web browsers, set those as default and disable Internet Explorer should they so wish. The Commission welcomes this proposal, and will now investigate its practical effectiveness in terms of ensuring genuine consumer choice."
For now--and until the EU accepts Microsoft's proposal--the software maker said it will continue to ship only the browserless "E" version in Europe.
Opera votes for the ballot
Hakon Wium Lie, who as CEO of Opera Software has been outspoken about the IE antitrust issue, was delighted with the proposal.
"It's a happy day for us," Lie said. "We certainly think the ballot is good news and think it will give users a genuine choice."
What's not yet clear is what browsers will appear on the ballot list. Naturally, Lie is concerned about that matter.
"The rules for getting onto the ballot will be something the EU will watch closely," Lie said. It wouldn't be a good idea "to limit it to only one or two, but exactly how many is a good question."
Mozilla, which oversees development of the open-source Firefox browser, was more cautious.
"We're interested in seeing the specifics of the proposal that Microsoft is making and until that point it's hard to have a definitive reaction," said Chief Executive John Lilly in a statement. "It is, of course, a good development that Microsoft will make changes to allow users to choose their own default Web browser, as today's browser mediates so much of our online experience."
Mozilla also had questions about criteria to be selected for the ballot, what terms Microsoft might impose to be part of it, and whether Microsoft will update versions of Windows already running with the ballot.
User headaches
The planned browserless version would create a number of headaches for users, including forcing them to try to download a competing browser without having Internet Explorer to do so, as well as making it more difficult to upgrade to Windows 7 than it would otherwise be. For example, moving from Vista to Windows 7 "E" would require a new installation of the operating system, while users elsewhere can just upgrade their existing Windows installation.
"While the Commission solicits public comment and considers this proposal, we are committed to ensuring that we are in full compliance with European law and our obligations under the 2007 Court of First Instance ruling," Smith said. "PCs manufacturers building machines for the European market will continue to be required to ship 'E' versions of Windows 7 until such time that the Commission fully reviews our proposals and determines whether they satisfy our obligations under European law.
Microsoft is also committing to "a public undertaking designed to promote interoperability between third party products and a number of Microsoft products, including Windows, Windows Server, Office, Exchange, and SharePoint."
The software maker faces a separate complaint over Office.
"Like the Internet Explorer proposal, the interoperability measures we are offering involve significant change by Microsoft," Smith said. "They build on the Interoperability Principles announced by Microsoft in February 2008, which were also based on extensive discussions with the Commission, and they include new steps including enforceable warranty commitments."
Microsoft has had "preliminary talks" with European Union officials with the hopes of settling several regulatory probes, according to a Bloomberg report.
According to the report, Microsoft is aiming to settle the matters before EU Competition Commissioner Neelie Kroes steps down at the end of the year. One issue is the EU's well-publicized concern over the bundling of Internet Explorer into Windows, while the other pertains to Office software, Bloomberg said.
The EU earlier this year issued a preliminary finding that the inclusion of a browser in the operating system violated European antitrust law and has been exploring a variety of potential remedies, including forcing Microsoft to distribute rival browsers with its operating system.
Last month, CNET News reported that Microsoft was planning to ship Windows 7 in Europe only in versions that had the browser feature removed, aiming to sidestep regulatory action. However, both the EU and rivals issued concern over that approach.
As for the Office inquiry, Microsoft has said it was opened in January 2008 and resulted from complaints filed by a trade association of Microsoft's competitors.
An EU spokesman did not immediately respond to a request for comment on the report of settlement talks and a Microsoft representative declined to comment. Both Microsoft and an EU spokesman declined to comment in the Bloomberg report.
The European Commission on Thursday responded with a mixed assessment of Microsoft's move to strip Internet Explorer out of European versions of Windows 7.
As first reported by CNET News, Microsoft has been telling PC makers of its plan to offer Windows 7 in Europe with the browser removed. PC makers and consumers would have to add in a browser. That would be simple--and potentially profitable-- for PC makers, but could prove quite a hassle for those trying to upgrade an existing PC to Windows 7.
In a statement, regulators said that the move seems a step backward in the retail software arena, but said it could be more positive in the new PC market, which is how 95 percent of consumers get a new version of Windows.
"As for retail sales, which amount to less than 5 percent of total sales, the Commission had suggested to Microsoft that consumers be provided with a choice of Web browsers," the Commission said. "Instead Microsoft has apparently decided to supply retail consumers with a version of Windows without a Web browser at all. Rather than more choice, Microsoft seems to have chosen to provide less."
But, as for the new computer market, stripping out the browser might be a good thing, the Commission says.
"As for sales to computer manufacturers, Microsoft's proposal may potentially be more positive," the commission said. "It is noted that computer manufacturers would appear to be able to choose to install Internet Explorer--which Microsoft will supply free of charge--another browser or multiple browsers."
Opera, the Norwegian browser maker that pushed the EU to open its case, said that it is wholly dissatisfied with Microsoft's action.
"They are under pressure to do something and they come up with this thing, which is quite obviously not going to work," Opera CTO Hakon Wium Lie said in an interview "This is very similar to what the remedy was in the Media Player case. It was widely recognized that that was an insufficient remedy. It was too little too late."
Lie said Opera favors an option that the EU has been considering in which consumers would be offered a choice of browsers when they buy a new PC.
The Commission said it expects to act soon in its own case against Microsoft, and suggests Microsoft's action wasn't among those it was considering. The commission issued a preliminary finding in January that the inclusion of a browser in Windows violated European antitrust law. Microsoft has objected to that finding.
"The Commission will shortly decide in the pending browser-tying antitrust case whether or not Microsoft's conduct from 1996 to date has been abusive and, if so, what remedy would be necessary to create genuine consumer choice and address the anticompetitive effects of Microsoft's long-standing conduct," the Commission said. "In terms of potential remedies if the Commission were to find that Microsoft had committed an abuse, the Commission has suggested that consumers should be offered a choice of browser not that Windows should be supplied without a browser at all."
The chief complainant in the European browser case against Microsoft says that the move to strip Internet Explorer out of Windows 7 in Europe is an insufficient step that won't lead to better competition in the browser market.
In an interview, Opera Chief Technology Officer Hakon Wium Lie said that with regulators threatening action, Microsoft was under pressure to do something, but said that its choice wasn't what Opera was looking for. Lie told CNET that Opera wants people to have access to more browsers, not fewer.
Hakon Wium Lie
(Credit: Opera)"I don't believe this is going to restore competition in the marketplace," he said.
Instead, Lie favors a proposal that the European regulators have been considering that would require users to be given a choice to download one or more browsers the first time they access the Internet.
"We would like to give users a genuine choice," Lie said. The remedy that the EC has been discussing, a so-called "must-carry" remedy, would be a better solution, he said.
Microsoft acknowledged in a blog posting that regulators could still force that to happen.
"Our decision to only offer IE separately from Windows 7 in Europe cannot, of course, preclude the possibility of alternative approaches emerging through Commission processes," Deputy General Counsel Dave Heiner said in the blog.
But Heinen said that Microsoft believes its move puts it in compliance with European law.
Audio
What a browser-less Windows 7 means
CNET News intern Mats Lewan talks to reporter
Ina Fried about the impact of a browser-less Win7
on the market and European consumers.
Download mp3 (2.89MB)
"We believe that this new approach, while not our first choice, is the best path forward given the ongoing legal case in Europe," he wrote. "It will address the 'bundling' claim while providing European consumers with access to the full range of Windows 7 benefits that will be available in the rest of the world."
For his part, Lie said it is a solution that won't fundamentally change anything, as was the case when the company issued a version of Windows in Europe with the Media Player removed.
"They are under pressure to do something and they come up with this thing, which is quite obviously not going to work," he said. "This is very similar to what the remedy was in the Media Player case. It was widely recognized that that was an insufficient remedy. It was too little too late."
By removing the browser, Microsoft won't make life any easier for Opera, which still needs to find a way to get its browser on to computers. It could theoretically now strike a deal with PC makers to get Opera included in place of Internet Explorer, but of Microsoft's rivals, only Google seems likely to have that kind of money. Lie said his company definitely does not.
"Certainly, we are in no financial situation to pay lots of money to have Opera distributed on new PCs," he said.
The situation is even more precarious for those upgrading existing machines to Windows 7. In that case they get a PC with no browser at all. Microsoft will make lots of CDs that will give users IE 8 if they want, but Opera and rivals have no easy way to get on those machines, short of following Microsoft's approach.
Lie also objected to the fact Microsoft is only making the move in Europe.
"It's Europe only," he said. "We're looking for more than that. We want the whole world to have better access to better browsers."
Microsoft's move to offer Windows 7 in Europe without a browser may help rivals, but it could make life more difficult for European consumers, particularly those who want to upgrade their existing machines.
As first reported earlier on Thursday by CNET News, Microsoft plans to ship Windows 7 to both PC makers and retail stores with Internet Explorer removed.
Now, most people will get Windows 7 on a new PC. Presumably, in that case, the computer maker will chose to add back Internet Explorer, include one or more rival browsers, or do both.
Indeed, that is what Microsoft itself is suggesting.
"Microsoft recommends that OEMs pre-install either IE8 or at least one other browser of their choice before distribution," Microsoft said in a memo to PC makers that was seen by CNET News. "If you do this, your end users in the European territory should be able to access the Internet without any additional steps or inconvenience."
The real hassle comes for those who want to upgrade their existing PC to Windows 7.
Moving from Windows Vista to Windows 7 can normally be done via an upgrade that preserves one's applications and data. However, because it removes the browser, moving to the "E" version of Windows 7 can only be done with a clean installation.
At that point, users have a system with no browser at all. So if they want Firefox or Opera or any other browser, they have no easy way to get it. For its part, Microsoft plans to make it as easy as possible for them to get IE. It will offer it via CD-ROMs at retail stores and via FTP, an old file downloading technique that has been largely sidelined due to modern browsers.
Forrester Research analyst J.P. Gownder said that the result is something that is very unfriendly to the very consumers that the EU is allegedly trying to protect. The European Union said in January that it had reached a preliminary finding that the inclusion of a browser within Windows violated its antitrust laws.
"It's a disaster caused by poor regulatory oversight," he said."It's definitely regulation gone wild and it's not going to help the consumer."
Matt Rosoff, an analyst with Directions on Microsoft, said the software maker probably made the move in an effort to avoid further regulatory action on the part of the European Union, which said in January that it believed the inclusion of a browser in Windows was a violation of European antitrust law.
"I guess Microsoft has taken the preemptive move to avoid a big fine," he said. "The EU didn't ask them to do this. They are still fighting the statement of objections."
Audio
What a browser-less Windows 7 means
CNET News intern Mats Lewan talks to reporter
Ina Fried about the impact of a browser-less Win7
on the market and European consumers.
Download mp3 (2.89MB)
So who benefits? Well, PC makers stand to gain, because they now have a more valuable piece of real estate to sell. In the past, they could offer deals to include rival browsers as the default on a new PC, but they were still shipping a PC with Internet Explorer. Presumably now, a browser maker could strike a deal to be the only browser on a machine.
"It certainly gives them a new placement to sell," Rosoff said. "Previously, with IE included, there wasn't as much incentive for browser makers to strike these kind of deals."
Of course, striking an exclusive deal would probably take a lot of cash. So it would seem Google, and not Opera (which brought the EU complaint), is in the best position to take advantage of the new landscape.
Gownder said he expects most new machines sold in Europe will still come with Internet Explorer, though some smaller PC makers might opt to exclude Microsoft's browser.
"It could be that there are some deals cut," Gownder said. "I would think the more typical case is that they ship with IE or IE plus one other."
As for Microsoft, Rosoff said that the company plans to offer an "Internet Pack" disc that includes not only IE, but also its Windows Live programs such as Windows Live Mail and Windows Live Messenger.
Editors' note: Matt Rosoff is a member of the CNET Blog Network.
