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Regulators don't buy Microsoft's excuses about a "technical error"

It had seemed that Microsoft Corp. (MSFT) and the European union had finally resolved their differences when it came to antitrust issues.  Microsoft agreed that it would offer a special "ballot screen", which would give users the choice of multiple browsers when they first installed or used Windows 7 -- and as a result, third-party browser makers would be on a level playing field and face no "bundling" discrimination.  The EU asserts its claims were validated, as the ballot screen appeared to cause a large drop in Microsoft's EU browser market share.

But that fragile true has been shattered when Microsoft went back on its promise, and stopped offering the ballot screen -- temporarily -- with the rollout of Windows 7 SP1.  Microsoft in past comments has blamed the abandonment of the option on an undisclosed "technical error" in the update.

EU regulators are unsympathetic.

This week they announced a so-called "statement of objections" -- a procedural step serves as a warning of impending punishments.

The EU's antitrust regulator, the European Commission writes:

The European Commission has informed Microsoft of its preliminary view that Microsoft has failed to comply with its commitments to offer users a choice screen enabling them to easily choose their preferred web browser. In 2009, the Commission had made these commitments legally binding on Microsoft (see IP/09/1941)....

In its statement of objections, the Commission takes the preliminary view that Microsoft has failed to roll out the browser choice screen with its Windows 7 Service Pack 1, which was released in February 2011. From February 2011 until July 2012, millions of Windows users in the EU may not have seen the choice screen. Microsoft has acknowledged that the choice screen was not displayed during that period.

Browser Ballot Box
Microsoft's Windows 7 Service Pack 1 "accidentally" turned off the browser ballot box.
[Image Source: Telegraph UK]

It's hard to say what, if anything, Microsoft can do at this point to avoid punishment for "accidentally" breaking its agreement with the EU.  One important thing to note, though, is that the precise punishment has not been announced.  Thus it is probably in Microsoft's best interest to provide sound technical evidence (if it has it) supporting its assertion that the ballot screen was turned off on accident.

The company faces tough questions, in the sense that even if it's telling the truth about the initial error being accidental, that it's hard to believe that the company wouldn't notice the ballot screen being gone for a full year.  Add to that the background that Microsoft had seen its market share disintegrate after the browser screen went live, and the picture painted is rather incriminating.

Microsoft has struggled in the past with the region's stricter antitrust laws.  It recently lost its appeal to vacate a €899M fine, although the EC did kindly reduce it to a mere €860M ($1.1B USD).  The software giant has paid close to $2B USD in total fines to the European union for antitrust offenses.  

Microsoft is also being investigated for API abuse, following claims by third party browser makers that they were being "excluded" from the ARM-architecture-compatible version of Windows 8.

Source: EU

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RE: If I was MS
By Cheesew1z69 on 10/24/2012 1:35:48 PM , Rating: 4
Why should they be forced to do anything with THEIR product that they don't want to?

RE: If I was MS
By othercents on 10/24/12, Rating: 0
RE: If I was MS
By andrewaggb on 10/24/2012 2:40:44 PM , Rating: 5
If I ever hear this again... Netscape went out of business because their browser wasn't as good.

That's the only reason I switched. And these days I run chrome/ff/ie, because I can. This time I'm in Chrome. And I didn't need a ballot, thanks.

RE: If I was MS
By NellyFromMA on 10/24/2012 2:51:35 PM , Rating: 4
Maybe Netscape went out of business because their business model made no sense.

Honestly, browsers aren't paid products. WHY IS THIS EVEN AN ISSUE?!?!

RE: If I was MS
By JasonMick on 10/24/2012 3:52:48 PM , Rating: 2
Honestly, browsers aren't paid products. WHY IS THIS EVEN AN ISSUE?!?!
That's technically accurate, but slightly misleading.

Browsers do earn their makers tens, if not hundreds of millions of dollars, as search engine firms pay to place their engine as the default search built into the browser.

Thus browsermakers like Mozilla, Google, or Microsoft do make big money off their browsers the same way as anything else on the internet -- by search/advertising.

I don't agree with the EU's decision, particularly when Apple and Google don't have to offer ballots on their products....

But it also would be wrong to think that browsers are made out of some sort of puppies, kittens, and happy hippie thoughts. They're a profitable product.

RE: If I was MS
By mike66 on 10/24/12, Rating: 0
RE: If I was MS
By Gurthang on 10/25/2012 9:32:11 AM , Rating: 3
Wrong, double wrong with extra crunchies.

Any bundling of Netscape Navigator that you may have eperienced with your install of Windows 95 was done by the OEM who customized the 95 install for the PC you bought from them.

As to Microsoft "stealing"... The orginal Netscape Navigator was made by a former NSCA Moasic developer and hence it borrowed heavily from design of Moasic though no code was "copied" or shared between them but you can bet most of the orginal code was built on ideas devised in Moasic. Internet Explorer 1.x was built from code bought from Spyglass which was built from NSCA Moasic. So while I am sure in the great feature battles of the first browser war both sides borrowed and stole ideas bot browsers actually are related hence the similarities. Things started going in IE's favor around IE3 though mostly because Netscape got a reputation of being buggy.

While MS's IE contributed to Netscape's demise they were a victim of a bad business model. Basically the browser as a paid for application was never going to work and they knew it s they gave the betas away for free which ment everyone just hoped from beta to beta. Netscape made far more money from their web server software at first but Sun kicked their butt on the high-end and the "free" web servers like IIS started eating them up on the low end. Resulting in diminishing profits and ultimatly a buyout by AOL who mostly used Netscape as a bargining chip with MS to get a better deal with the whole IE integration in AOL. As management styles clashed between AOL and Netscape employees got things got worse and most the the talent jumped ship. The rest is history.

RE: If I was MS
By NellyFromMA on 10/25/2012 10:20:44 AM , Rating: 2
Obviously I do not think browsers are made of kitties...

However, lets call it what it is. The EU would rather have another company be at the forefront of the internet other than Microsoft. Especially if they have EU roots.

These competitors are upset because they want to latch of their competitors success to supersede Microsoft's presence in the market place. It's justification is lackluster at best; anything but kitties.

RE: If I was MS
By Solandri on 10/24/2012 11:36:46 PM , Rating: 2
Netscape went out of business because their browser wasn't as good.

No it didn't. Netscape's business model made sense initially. You had to buy Netscape for something like $20, which given the huge amount of information available via the web was a paltry admission fee.

Then Microsoft bundled IE for free with Windows, pulling the rug out from under Netscape. That's why Netscape went under - because the company which controlled most of the desktop market made it impossible for the company with most of the web browser market to sell its product.

Microsoft did this because they perceived Netscape as a threat to Windows. The browser represented an OS-agnostic user experience. You could see the same web pages and run the few early web apps on a computer running any OS. If the browser became the next desktop, then Microsoft's near-monopoly of the desktop OS was doomed. Why pay $100 for Windows when you could get the same thing for free with Linux? So they did everything they could to kill it or wrest control of it (even adding their own proprietary web page standard which would only render on Windows, which defeats the whole purpose of the web). The same thing happened years later with Java - same threat, same response (proprietary extensions), with Microsoft eventually removing native Java support from IE.

Later iterations of Netscape weren't as good because they had no income with which to improve their product. Microsoft meanwhile was subsidizing IE development with Windows and Office sales. Netscape ended up having to sell themselves (a stock swap actually) to AOL to avoid bankruptcy. And AOL tried to turn it into a portal rather than a simple web browser, which was when it really started sucking.

Yes eventually Firefox broke IE's stranglehold, but Firefox didn't happen in a vacuum. First, Microsoft allowed IE to stagnate once they eliminated Netscape as a threat. They weren't interested in actually advancing the browser, they just wanted to make sure it didn't threaten their OS. After Netscape was pretty much gone, there was about a 13 month period just before Firefox's initial release where IE received no new features, only security upgrades. Second, the Mozilla foundation gets large amounts of money from companies interested in a less OS-dependent computing experience, primarily Google. So Firefox development could "compete" on an even footing with IE's development - subsidized.

Remember that any time you think getting the browser for free was good. Web browser technology today is about 13 months behind where it should be because Microsoft used its desktop OS monopoly to eliminate the browser competition; not because they wanted to build a better browser, but because they just wanted less competition. Who knows how many years further behind it is than it would've been if browser companies had been able to sell it like most other productivity software.

RE: If I was MS
By raddude9 on 10/25/2012 5:09:05 AM , Rating: 2
Thanks Solandri, that's an awesome answer.

RE: If I was MS
By GatoRat on 10/25/2012 2:50:06 PM , Rating: 3
Your history isn't entirely accurate.

Netscape initially charged nothing. It was only AFTER IE shipped that Netscape started charging $10 per copy. They were widely criticized for this and quickly changed to charging only corporate customers.

Moreover, Netscape was awful. It leaked memory like crazy and would often crash and/or consume all of memory or CPU just sitting doing nothing. Developing for Netscape was a nightmare. Perhaps this, more than anything, made IE so welcome.

Netscape pointedly refused to modernize their browser and embrace emerging web standards. To say they were intransigent is an understatement.

RE: If I was MS
By raddude9 on 10/26/2012 4:50:09 AM , Rating: 2
your history on the other hand is entirely inaccurate.

v1.0 of Netscape Navigator was only free for educational and non-profit organization use as were the many following versions. The only versions that were entirely free were the pre-release versions.

Sure Netscape leaked memory and crashed a lot, but so did the early versions of IE.

I have absolutely no idea what you mean by
Developing for Netscape was a nightmare

And what are you talking about when you say:
Netscape pointedly refused to modernize their browser and embrace emerging web standards

Because Netscape were busy giving us useful new and open standards like Javascript in v2.0, while microsoft were busy trying to hoist proprietary and closed languages like VBScript on us. In case you have amnesia, all browser makers back then were 'bending' the standards to make the web more useful, but at least they weren't trying to tie the web to single OS like microsoft was.

RE: If I was MS
By Cheesew1z69 on 10/24/2012 7:36:38 PM , Rating: 3
It's THEIR OS, they can put whatever they want into it. As for choice, there was choice.

RE: If I was MS
By StevoLincolnite on 10/24/2012 10:55:23 PM , Rating: 1
Unfortunately, when you release a product in an overseas territory, you need to abide by it's laws and regulations.

If the EU mandated that all of Microsoft's products must be a bright fluorescent pink, then Microsoft has to do it if it wishes to sell it's product in that territory, regardless if us, the consumers like it or not. :(

RE: If I was MS
By Solandri on 10/24/2012 11:47:34 PM , Rating: 1
It's THEIR OS, they can put whatever they want into it.

You cannot leverage a near-monopoly in one market to create an advantage for yourself in another. If Ford owned 90% of the automobile market, and decided to change the engine so it would only run on Ford-patented fuel, they would come under anti-trust investigation for it too.

But all this was relevant a 10-20 years ago. IE use is now under 50% and this is no longer the case. Any damage which was done has been done and can't be undone at this stage. So there's little point continuing to force Microsoft to allow users to choose their browser upon initial bootup.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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