On January 16, 2009, the European Union found that Microsoft’s practice of bundling its web browser with its operating system violated EU antitrust laws. As a result of the ruling, Microsoft will not be able to sell the two products together in the twenty-seven EU member nations.

In a statement released by the European Commission, the EU found that Microsoft’s practice “harms competition between web browsers, undermines product innovation, and ultimately reduces consumer choice.” The Commission’s statement went on to say that it was “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.” Microsoft was given eight weeks to respond to the EU ruling, and the company may appeal.

This latest EU antitrust investigation was initiated by a compliant filed by Opera Software, a Norwegian web browser maker. Opera claimed that Microsoft’s practice of bundling its browser with the Windows OS, effectively giving it away for free to Windows users, unfairly and illegally hurt competition in the web browser market. As a result of Microsoft’s market share among Internet browsers, some software was only written for Internet Explorer and not other browsers.

Microsoft has been accused of anti-competitive practices on both sides of the Atlantic. The European Commission has brought several complaints against Microsoft. In February 2008, the EU fined Microsoft 899 million euros ($1.17 billion), one of its largest fines ever, for defying sanctions imposed for previous anti-competitive behavior. Microsoft had failed to comply with a 2004 ruling regarding the company’s abuse of its market position.

Microsoft has increased its diverse revenue, so it is not quite as reliant on its operating system sales as it once was. This ruling is certainly a setback for Microsoft, but it will not likely jeopardize the corporation. The Internet Explorer browser has become ubiquitous over the last decade or so, and one of the main reasons for this is that it was bundled on the Microsoft operating system. Internet Explorer will probably remain the dominant browser for many years to come because of its familiarity and the fact that so much software has been written for it and only it. However, this EU ruling may make it easier for alternative browsers to get toeholds in the European market. If new PCs are not sold with a pre-installed web browser, users may be much more inclined to install a rival browser than they would if Internet Explorer were still part of the package.

-Jason Katz

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