Analysis: Microsoft rivals advise EC on an antitrust remedy

Could more bundling, not less, be the answer?

It sounds odd, but the European Commission's solution to the problem caused by Microsoft bundling its Internet Explorer browser into the Windows OS appears to be more, rather than less, bundling.

If IE is in the OS on its own, it has an unfair advantage over rival browsers such as Mozilla's Firefox, Opera, Google's Chrome and Apple's Safari because people are generally averse to downloading software if they don't absolutely need to and make do with what's already on their desktops.

So, put all of those rival browsers, and perhaps the numerous morphed open-source versions of them as well, into Windows and bingo, the playing field is level. That seems to be the logic applied by the Commission, Europe's top antitrust regulator, as it prepares to slap Microsoft with another humiliating antitrust ruling, expected later this year.

A list of browsers should be presented on a ballot screen that would be installed onto PCs together with the Windows OS. This would allow users to decide which browser they want.

But it's not that simple, as the Commission is about to find out. At the end of this week it receives responses to a questionnaire it distributed among PC makers and software firms, asking for advice on how to craft the remedy to the browser market problem. Two very different answers based around the creation of the ballot screen are emerging from the replies being drafted.

The first involves picking the five most popular browsers and preloading them so that they are installed with Windows. The selected browsers would appear next to each other in a horizontal line on the ballot screen, which would pop up around the time the user first attempts to access the Internet. The user would then be prompted to choose a default browser.

The other alternative is to have an all inclusive list of all available browsers on the market. A typical browser uses around 6MB of memory. If there are, say, 15 browsers out there that means well over a gigabyte of memory, most of which is wasted because the user will never need all the browsers.

The idea being considered is to put links to all the browsers on the ballot page rather than to preload them all. The links would allow a user to download the browser of their choosing from the Internet.

The advantage of this remedy is that the Commission wouldn't be put in the position of having to choose between rival browsers.

But it raises an obvious problem: How do users gain Internet access to download a browser if they don't already have a browser to connect them in the first place?

One idea is to allow browser makers to compete to have their software preinstalled on PC manufacturers' desktop and laptop computers. But this favors the wealthiest players in the market: Microsoft and Google, which would be able to outbid all others with ease.

Some lawyers fear that if the Commission chooses this option and Google secured this privileged position for its Chrome browser it would simply replace a Microsoft monopoly with a Microsoft-Google duopoly, which in the long term would be equally harmful to consumers.

"If the remedy the Commission chooses results in the real estate on the PC for one or other browser being for sale, then there's a problem for everyone apart from the highest bidder," said Thomas Vinje, a lawyer representing Opera, the Norwegian browser company that sparked the Commission's antitrust case with a complaint to the regulator in December 2007.

However, Google insists it isn't interested in buying market share for Chrome, which remains the smallest and youngest of the big five browsers.

People familiar with Google's thinking say the company is more concerned about speed of access to the Internet. They point out that all the main rivals to IE are faster than Microsoft's browser, so any alternative to IE would be acceptable.

A faster browser would allow more searches within a given period of time, which would mean more advertising revenue for Google's search engine.

"For Google, the browser is simply a delivery mechanism," said one person close to the company who asked not to be named. "It doesn't like having to rely on its arch rival Microsoft's IE browser in order to distribute its search and other internet services," he added.

In its response to the Commission's questionnaire about the shape of the remedy, Google is understood to favor the preloaded option, involving a short list of the most popular browsers being preinstalled and flagged on the ballot screen.

Google is understood to have even proposed that Chrome be excluded from the ballot screen list to make way for the fastest growing browser at any given time. Google declined to comment.

Microsoft did not receive the questionnaire about antitrust remedies, for obvious reasons. However, it has said in the past that it bitterly opposes the ballot screen remedy, which amounts to a "must carry" order forcing it to install rival browsers with Windows.

CompTIA, a trade group ally of Microsoft's that represents many small European PC manufacturers and assemblers did receive the questionnaire. In its reply to the Commission, the group said that a must-carry remedy imposes financial, technical and administrative burdens on its members, forcing them to alter their business models, which are built around a fully equipped Windows OS with built-in IE.

It also argues that consumers don't want the must-carry remedy either. "We believe that many consumers will not like the multiple browser feature that is under consideration -- they will find it confusing, unnecessary and complicated," CompTIA said in a recent statement.

The statement was issued on behalf of 90 small PC manufacturers, including bluechip Computer of Germany, PC Peripherals of Ireland and Bionic Electronics HT of Cyprus. None of the commonly known original equipment manufacturers were included.

Microsoft declined to comment on a possible antitrust remedy against it. However, it has urged PC manufacturers, including CompTIA's members, to share their concerns with the Commission about the must-carry idea and the notion of a ballot screen featuring a choice of browsers.

The Commission also refused to comment. But one person close to the antitrust team handling the case said the questionnaire feedback will play an important role in helping shape the final remedy, assuming they do push ahead with a negative ruling as expected in the fall.

Vinje said the efficacy of any remedy will be determined by how it is designed.

He added that one of the most crucial questions is when, during the process of connecting a new PC to the Internet, the consumer is prompted to select a browser. The sooner the ballot screen appears the better, he said.

Copyright © 2009 IDG Communications, Inc.

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