Europe Steps Up Microsoft Antitrust Queries

BRUSSELS -- The European Commission confirms it is contacting hardware manufacturers about Microsoft's licensing policy because it suspects anticompetitive behavior.

Calling the move a preliminary fact-finding stage, the Commission says it is responding to companies that are expressing concern about certain licensing conditions Microsoft attaches to its Windows operating system.

These so-called nonassert obligations prevent hardware manufacturers from enforcing hardware patents they hold that may have implications for software.

Holding Back

If, for example, IBM patented a method to speed up a PC's operations, the company could not prevent Microsoft or any other competing hardware manufacturer from using the technology. The restriction is under terms of Microsoft's license for Windows.

A number of hardware manufacturers, including IBM, Dell, Hitachi, and Toshiba, have signed these nonassert clauses. They can't afford to offer PCs without Windows, says Thomas Vinje, an outspoken critic of Microsoft and a partner in the Brussels office of law firm Morrison & Foerster LLP. Vinje's clients include Dell and Fujitsu.

The Commission confirms it has sent a series of letters to unspecified equipment manufacturers requesting information on the agreements they have entered into with Microsoft. The organization has not yet reached any conclusions, nor has it contacted Microsoft about the issue, the Commission says in a statement.

Microsoft was not immediately available to comment.

The software giant started inserting the nonassert obligations into contracts with hardware manufacturers four or five years ago, according to Vinje.

Other Actions

The inquiry is separate from an ongoing antitrust action conducted by the Commission. The antitrust case focuses on Microsoft's policy of bundling its audio-video Media Player software into successive versions of Windows.

The European Commission has accused Microsoft of abusing the dominant position of Windows in order to foreclose the market for audio-video software.

The Commission also accuses the U.S. software giant of leveraging its dominance of PC operating system software into the market for low-end server operating systems.

The inquiry into Microsoft Windows licensing agreements with hardware manufacturers could form the basis of a separate antitrust investigation. The Commission could take that route if it suspects Microsoft is using the nonassert clause to stifle innovation among hardware manufacturers.

When a hardware manufacturer "signs a clause like this, it's a pretty big disincentive to innovate," Vinje says.