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The European Commission is considering a new antitrust case against Microsoft, suspecting the software giant is trying to leverage its dominance of PC operating systems into the market for mobile phone software, say sources familiar with the regulator.

Commission spokesperson Amelia Torres denied that companies in the mobile phone market have complained to the Brussels-based competition authority. "I am not aware of any complaints," she said.

But she declined to comment on whether the European Commission might open a new investigation on its own initiative.

Mobile Aggression

The EU competition regulator is concerned that Microsoft might take over the market for mobile phone software, according to a senior advisor to the European Commission. "Mobile phones are a very important market in Europe. The Commission is worried that Microsoft might take advantage of the strength of Windows in order to dominate in mobile phones," he said.

By leveraging its might into mobile telephony, Microsoft might reduce the role of mobile phones to mere conduits for its software, just as computer makers complain it has done with PCs.

"Microsoft wants to commoditize mobile phones as it has done with computers," said a lawyer representing one of the main mobile phone makers in Europe, who requested anonymity.

Microsoft threatens mobile phone operators as well as manufacturers, he added. "If Microsoft's .Net initiative is to be a success, it needs mobile phones to play by Microsoft's standards. Mobile phone operators could have a problem with that," he said, adding that if Microsoft failed to establish itself in mobile phones "this would leave a big hole in its .Net strategy."

The .Net initiative attempts to link Internet users to Microsoft's system, giving them a passport for access to Microsoft and partner sites that conform to .Net standards.

When mobile phones become Internet-compatible, the phone operators want to become the Internet gatekeepers for their customers. The .Net initiative would undermine their role in the relationship with those customers, the lawyer said.

Bundling Concerns

Finnish mobile phone maker Nokia, the manufacturer with the most to lose from a Microsoft assault on its market, has not yet complained to the European Commission, according to one of its lawyers in Brussels. "There is no Nokia complaint, but there is huge scope for conflict," he said, asking not to be named.

Reports suggest European companies have already complained to the Commission about Microsoft's move into the mobile phone software market. The companies contend that Microsoft is bundling its corporate e-mail software, called Titanium, with code that ensures servers have better connections to Windows-based wireless devices than to competitors' devices, according to the article.

Microsoft does aim to transform mobile phones into mini-PCs. In October, France's Orange SA launched the Windows-based Orange SPV in the U.K. However, last week the company was rejected by U.K. phone maker Sendo, which decided to power its phones using Nokia software. Microsoft has a minority stake in Sendo.

Ongoing Probe

Any new probe into Microsoft is unlikely to begin until the existing case is closed. People close to the Commission said it is highly unlikely the new concerns about mobile phones would be added to the existing case, as this would delay that ruling. The existing case against Microsoft comprises two separate investigations. The first stems from a complaint about Microsoft's abuse of its Windows monopoly by rival Sun Microsystems. The second part, focused specifically on Windows 2000, was initiated by the Commission.

Microsoft is also fighting accusations that it may have violated antitrust rules by using illegal practices to extend its dominant position in the OS market into the market for low-end server operating systems.

It is also accused of bundling some so-called middleware functions, such as its Media Player software, into Windows 2000. The Commission has said it expects to issue a preliminary ruling by the end of this year, with a final verdict due early in 2003.

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