Microsoft, EC Battle May Cause Vista Delay in Europe

Concerns over its lingering dispute with European antitrust regulators may force Microsoft to delay the launch of Windows Vista in Europe.

The software giant said unless European Commission (EC) regulators give it a clear indication about whether the first new version of its operating system since XP will be targeted for antitrust issues, it may push back the release date for the platform in that region.

Proposals Submitted

Microsoft added that it is awaiting a response to what it called “concrete proposals” made to the commission about possible feature modifications in Vista to enable it to pass antitrust muster.

“Once we receive the Commission’s response, we will know whether the Commission is seeking additional product design changes that would result in a delay in Europe,” the company said in a statement.

The EC responded by denying that it would be responsible for any further slippage in the release dates of the platform, which Microsoft has already postponed for in-house reasons.

Some members of the European Parliament, however, criticized the commission for jeopardizing the timely release of the new software.

“It is alarming that one of the world’s most successful technology companies considers the European Commission’s attitude a risk factor that might delay European companies’ access to future Microsoft products such as Windows Vista,” four lawmakers wrote in a letter to the commission. “Europe needs to encourage innovation in the technology sector.”

New Battlefront?

The pending arrival of Vista has long shadowed Microsoft’s battle with the European Union regulatory body.

Microsoft now plans to have an enterprise version of Vista ready to ship later this year, and hopes to have a consumer edition available early in 2007. It recently began to provide information on pricing and other details, an apparent attempt to build interest in the program before its launch. Such interest may be key in helping Microsoft keep potential PC buyers from defecting to Apple’s platform during the key fourth quarter holiday shopping season.

The commission has already fined Microsoft close to US$1 billion in two separate actions, and is still insisting that Microsoft needs to do more to comply with other aspects of its ruling. The EC ruled that Microsoft abused its market power and reduced competition in key areas, such as the market for server software in enterprises and in PC-based media players.

Because the EC focused on how Microsoft bundled together programs and features, and because Vista is meant to even more tightly integrate many different PC functions — such as Web search, Internet browsing and instant messaging — analysts have long believed there was significant risk that the EC would again go after Microsoft once the new platform was released.

The EC indicated it was working on a response to Microsoft’s latest questions, saying it had only received some information as recently as a week ago.

Feature Frenzy

The EC is likely to focus on the features that Microsoft has been touting as key upgrades in Vista, many of which involve folding what are currently standalone applications more tightly into the operating system.

For instance, Vista is believed to include built-in security features such as anti-spyware protection, something that may be seen as a threat to third party security software makers in Europe by the EC.

Already, Google has tried without success to get U.S. antitrust regulators to take another look at IE 7, which will be built into Vista, saying the automated search settings may run counter to the terms of the software maker’s settlement with the U.S. Justice Department.

Technically speaking, it may not be a stretch for Microsoft to create a watered-down version of Vista to keep regulators happy, but that would undermine much of the buildup that has taken place about the operating system upgrade, which was known earlier in its development cycle as “Longhorn.”

“For Microsoft, it’s important not to just release an upgrade of Windows,” said JupiterResearch analyst Michael Gartenberg. “They need to release the product they’ve been promising, with all the features that have leaked out or been said to be part of it.” Falling short of those expectations would be disastrous given the time users have waited for the upgrade, he added.

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