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EU warns Microsoft over new Windows 8 browser option

The interior of a Microsoft retail store is seen in San Diego January 18, 2012. REUTERS/Mike Blake
The interior of a Microsoft retail store is seen in San Diego January 18, 2012. REUTERS/Mike Blake

By Foo Yun Chee

BRUSSELS (Reuters) - EU antitrust regulators have told Microsoft not to repeat the mistake of denying consumers a choice of rival Web browsers in its new Windows 8 operating system, in a dispute that has already cost the software giant more than a billion euros ($1.3 billion) in fines.

EU competition commissioner Joaquin Almunia said on Wednesday he had spelt out his concerns to Microsoft about Windows 8, its new flagship software product which is set for release on Friday.

"I have precisely transmitted ... my concerns, what kind of presentation should be avoided if they don't want to take the risk of a new investigation," Almunia told a news briefing.

The company said it had taken heed of the warning, indicating its desire to draw a line under its decade-long battle with the European Commission.

"After discussions with the Commission, we are changing some aspects of the way the browser choice screen works on Windows 8 and will have those changes implemented when Windows 8 launches later this week," Microsoft spokesman Robin Koch said in a statement.

Almunia's warning came with charges that Microsoft had broken a promise to offer European consumers a choice of rival browsers in its previous version of Windows, which could result in a substantial fine.

Microsoft promised three years ago to offer browser choices, to settle an EU antitrust investigation and avoid a penalty that could have been as much as 10 percent of its global turnover.

But the European Commission said Microsoft had not fulfilled its pledge between February last year and July this year, confirming an earlier Reuters report.

"If companies enter into commitments, they must do what they are committed to do or face the consequences. Companies should be deterred from any temptation to renege on promises or even to neglect their duty," Almunia told reporters.

Microsoft could face a significant fine as it is the second time it has failed to comply with an EU order.

A sanction could top $7.4 billion or 10 percent of its revenues for the fiscal year ending June 30, 2012 - but the final figure is expected to be lower, as the infringement covered a relatively short period of time.

Microsoft, which has already been penalized to the tune of 1.6 billion euros ($2.1 billion) in the last decade for infringing EU rules, apologized. It has four weeks to reply to the Commission's "statement of objections" or charge sheet.

"Although this was the result of a technical error, we take responsibility for what happened, and we are strengthening our internal procedures to help ensure something like this cannot happen again," the company said in a statement.

NO TABLET PROBE

The EC action should serve as a warning to other companies, said Susanne Zuehlke, a partner at Brussels-based law firm Latham & Watkins.

"It shows that the Commission takes its enforcement seriously and follows up on cases even when they appeared closed," she said.

Almunia said he had no reason to go after Microsoft's operating system for tablets, a market that includes rivals Apple and Google.

"We have looked at Windows RT and on the basis of our investigation so far there are no grounds to pursue further investigation on this particular issue," he said.

The Commission said in July several companies had accused Microsoft of only allowing its own Internet Explorer browser to be installed on devices running Windows RT.

Microsoft's share of the European browser market has roughly halved since 2008 to 29 percent, on a par with Google's Chrome but behind Mozilla's 30 percent share, according to Web traffic analysis firm Statcounter.

With the Microsoft case heading for resolution, the next Web-related battle for the Commission is likely to be with Google, the target of complaints by Microsoft and more than a dozen other rivals over its core search engine business.

The world's most popular search engine is now in talks with the EU watchdog that could help it avoid sanctions which could amount to some $4 billion.

($1=0.7711 euros)

(Editing by Sophie Hares and Greg Mahlich)

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