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Microsoft Announces It Will Ship Without IE in Europe - Reactions - Updated
Thursday, June 11 2009 @ 06:25 PM EDT

Microsoft has just announced that it will ship Windows 7 in Europe without Internet Explorer:
The worldwide launch of Windows 7 is fast approaching, but a pending legal case raises concerns about the sufficiency of competition among the Web browsers that are available to Windows users in Europe. In January the European Commission provided its preliminary view that Microsoft’s “bundling” of Internet Explorer in Windows violated European competition law.

We’re committed to making Windows 7 available in Europe at the same time that it launches in the rest of the world, but we also must comply with European competition law as we launch the product. Given the pending legal proceeding, we’ve decided that instead of including Internet Explorer in Windows 7 in Europe, we will offer it separately and on an easy-to-install basis to both computer manufacturers and users. This means that computer manufacturers and users will be free to install Internet Explorer on Windows 7, or not, as they prefer. Of course, they will also be free, as they are today, to install other Web browsers.

[Update June 12, 2009: Note that the blog has been updated.]

My first reaction was, I guess that means you actually can remove the browser and Windows will still run, despite what Microsoft told the court in the US. My second was, if OEMs can choose to install IE, why wouldn't Microsoft just sit on them in various subtle ways to make sure it's in their best interests to always "choose" to install IE? And does this fix Vista? XP? I have some other reactions for you. Thomas Vinje of ECIS says this is "an acknowledgement of the validity of the EU Commission's case, but it is by no means enough.

Thomas Vinje of ECIS told Groklaw's Sean Daly:

First, this move by Microsoft is an acknowledgment of the validity of the European Commission's antitrust case against it.

Second, this is a step in the right direction, but it is far from enough. Had this step been taken, on a worldwide basis, in 1997, soon after Microsoft began tying IE with its monopoly Windows operating system, it might have been sufficient to remedy its illegal tying behavior. But today, after many years of illegal tying, the effects of Microsoft's abusive behavior are heavily entrenched. By its move today, Microsoft has admitted the existence of an abuse, and in the interest of consumers, antitrust law requires an effective remedy for the abuse.

Third, in that regard, Microsoft must now give users real choice, and not only buyers of new computers, but also existing users. Microsoft should provide a ballot screen through which both existing users and buyers of new PCs can easily select and get a browser of their choice.

Fourth, it is interesting that Microsoft has made this move in light of its oft-repeated assertions to regulators and others that it could not be done. Microsoft has said that IE could not be separated from Windows, but it appears to be possible after all.

Microsoft in its statement did admit that this self-remedy might not be all it will have to do to satisfy the EU Commission:
Obviously, this is a big step for Microsoft. But we’re committed to launching Windows 7 on time in Europe, so we need to address the legal realities in Europe, including the risk of large fines. We believe that this new approach, while not our first choice, is the best path forward given the ongoing legal case in Europe. It will address the “bundling” claim while providing European consumers with access to the full range of Windows 7 benefits that will be available in the rest of the world. Our developers are focused on delivering a great Windows 7 experience to customers and a great browser as well.

Our decision to only offer IE separately from Windows 7 in Europe cannot, of course, preclude the possibility of alternative approaches emerging through Commission processes. Other alternatives have been raised in the Commission proceedings, including possible inclusion in Windows 7 of alternative browsers or a “ballot screen” that would prompt users to choose from a specific set of Web browsers. Important details of these approaches would need to be worked out in coordination with the Commission, since they would have a significant impact on computer manufacturers and Web browser vendors, whose interests may differ. Given the complexity and competing interests, we don’t believe it would be best for us to adopt such an approach unilaterally.

Opera would like a "must carry" solution, according to an interview with Ina Fried:
In an interview, Opera Chief Technology Officer Hakon Wium Lie said that with regulators threatening action, Microsoft was under pressure to do something, but said that its choice wasn't what Opera was looking for. Lie told CNET that Opera wants people to have access to more browsers, not fewer. "I don't believe this is going to restore competition in the marketplace," he said.

Instead, Lie favors a proposal that the European regulators have been considering that would require users to be given a choice to download one or more browsers the first time they access the Internet.

"We would like to give users a genuine choice," Lie said. The remedy that the EC has been discussing, a so-called "must-carry" remedy, would be a better solution, he said.

The special European version will be called Windows 7 E, as in Windows Home Premium 7 E, and Emil Protalinski of ars technica points out that this means customers in Europe will get their computers without a browser to download a browser with:
Microsoft notes that the decision affects both OEM and Retail versions of Windows 7 products. While OEMs will have access to a free "IE8 pack" that allows them to add the browser back in, consumers who purchase retail copies will not have a browser that they can use to download a browser. Therefore, Microsoft will offer IE8 via CD, FTP, and retail channels. It looks like Mozilla, Opera, Google, and Apple will have to do the same if they want European Windows 7 adopters to have access to their browsers.
I should point out that the Internet works fine without browsers. Apple's OSX has phoned home with registration information and fetched patches from a dedicated client (not a browser) for years, just as one example. So you don't need a browser to download a browser. If, for example, Windows 7 E came with all the major browsers ready to connect to a download, at the customer's choice, as in even all of the above, why wouldn't that work? But if IE is easy to install and nothing else is, then what? And if it's left up to Microsoft-dependent OEMs to choose, then what? And what skeptics will be wondering is this: Is Microsoft trying to replicate the failure of the Window N remedy?

[Update: The New York Times reports that is precisely one reason for the cool EU Commission reaction to the Microsoft announcement:

One reason for the quick rejection, according to competition lawyers in Brussels and a commission spokesman, is that the European Commission did not want to repeat a mistake of the first Microsoft case, when it ordered the software maker in 2004 to sell a version of Windows in Europe without its media player.

Microsoft responded by selling its so-called “N” version of Windows for the same price as its full version, and consumers rejected the stripped-down system. The remedy also did not significantly improve the lot of competing media players. Microsoft said it sold only a few thousand copies of the “N” version.

End Update]

One difference is pointed out by CNET's Ina Fried, who broke the story:

In contrast with the "N" version, though, Microsoft will not also sell a full-featured version of Windows that includes the browser.

"Microsoft will not offer for distribution in the European territory the Windows 7 product versions that contain IE, which are intended for distribution in the rest of the world," Microsoft said in the memo. "This will apply to both OEM and Retail versions of Windows 7 products."

No doubt there will be more on this story to come, and as other reactions come in, I'll update the article.

Update: The EU Commission has now responded with a statement. The Brisbane Times highlights this part reflecting skepticism:

"In terms of potential remedies, if the Commission were to find that Microsoft had committed an abuse, the Commission has suggested that consumers should be offered a choice of browser not that Windows should be supplied without a browser at all," it said in a statement.
Ina Fried adds also the more positive parts of the statement:
In a statement, regulators said that the move seems a step backward in the retail software arena, but said it could be more positive in the new PC market, which is how 95 percent of consumers get a new version of Windows.

"As for retail sales, which amount to less than 5 percent of total sales, the Commission had suggested to Microsoft that consumers be provided with a choice of Web browsers," the Commission said. "Instead Microsoft has apparently decided to supply retail consumers with a version of Windows without a Web browser at all. Rather than more choice, Microsoft seems to have chosen to provide less."

But, as for the new computer market, stripping out the browser might be a good thing, the Commission says.

"As for sales to computer manufacturers, Microsoft's proposal may potentially be more positive," the commission said. "It is noted that computer manufacturers would appear to be able to choose to install Internet Explorer--which Microsoft will supply free of charge--another browser or multiple browsers."

The announcement of a self-remedy comes just as the EU Commission announced it was asking others in the software market for input on what would be an appropriate remedy:
According to an article published in the online edition of the Wall Street Journal, the EC sent out a questionnaire on Friday to PC makers and software vendors that, among other things, is asking for recommendations on the best method of implementing what it sees as a remedy to Microsoft's dominance in the browser market, sources familiar with the matter said.
The questionnaire the Commission sent around also asked if Microsoft was putting pressure on witnesses, according to this article by Paul Meller in ComputerWorld, EC: Is Microsoft pressuring witnesses in antitrust case?, so today's announcement comes inside that context:
The European Commission is asking PC makers and software rivals if Microsoft has been pressuring them in connection with the ongoing antitrust case concerning Web browsers, one such company said Tuesday....

"They ask if Microsoft has exerted untoward pressure on us in the market testing process," said the company executive who asked not to be named.

Meller's article indicates what the proposed EU Commission remedy it was asking for input about would be like:
Most of the nine questions seek feedback on the remedy, which would involve the creation of a so-called 'ballot screen' containing a list of browsers that users would refer to when connecting their new PCs to the Internet for the first time.

They ask questions including the following: which browsers the companies feel should be included on the ballot screen, how the screen should be designed, and whether the browsers' software should be pre-loaded in full or if the ballot screen should just include a link that would allow easy downloading of the browsers, according to one executive who has seen the questionnaire.

Todd Bishop of TechFlash asks an interesting question and has more from Opera. The latter first:

"I don't think what they have announced today is going to get them off the hook."

That's the first take from Hakon Wium Lie, Opera Software's chief technology officer, following the news that Microsoft will offer Windows 7 in Europe without Internet Explorer pre-installed....

"I don't think this is going to correct all of what we think is illegal behavior -- the tying over the years," Lie said. "I don't think this is going to restore competition. I think restoring competition is one of the goals of the European Commission. So I don't think this is the end of the case."

What he's pointing out is that this remedy doesn't wipe away past conduct. And he goes on to point out that IE lock-in is a worldwide problem. Next the interesting question, on which I suspect much will depend:
In addition, he said, it remains to be seen exactly what Microsoft will remove from the "E" versions of Windows 7 to be sold in Europe. Will it be just the IE logo on the desktop or will the company take out the HTML rendering engine and JavaScript and HTTP support?

Publicly, at least, Microsoft hasn't gone into that level of detail on what will be removed from the European versions. It's clear that it will be more than just the logo on the desktop, but the distinction between Windows and Internet Explorer functionalities under the hood of the operating system has been a subject of intense debate in the past.

"The E versions of Windows 7 will include all the features and functionality of Windows 7 in the rest of the world, other than browsing with Internet Explorer," Microsoft's Heiner writes. He adds that the European versions "will continue to provide all of the underlying platform functionality of the operating system -- applications designed for Windows will run just as well on an E version as on other versions of Windows 7."

It is so easy to mess with the competition, when you are a monopoly, I guess. There are so many ways.

Some History

Meantime, here's some history for you. It seems relevant particularly in light of what Fried reported:

Microsoft doesn't plan to offer the browser-less "E" version outside Europe, but is also offering an option in all regions in which users can hide IE 8, as part of a control panel that lets users turn on and off various operating system components.
Doesn't that bring you back to the US antitrust case? First, on Microsoft pressuring OEMs to choose IE, that was precisely the allegation in the US antitrust case. Here's an article from 2000, U.S. VS. MICROSOFT: Pursuing a Giant; Retracing the Missteps In the Microsoft Defense by Joel Brinkley and Steve Lohr, that takes you through the history of the how the US case against Microsoft in the Netscape browser litigation came to be. It's a long article, but fascinating, and David Boies, his twin with the halo, so to speak, makes an appearance.

And here's a trip down memory lane, DoJ skewers MS exec over falsified video, an article by John Lettice in The Register in 1999 about the famous demo that went wrong when Microsoft's Jim Allchin tried to demonstrate in court that separating IE from Windows 98 resulted in degradation in performance:

The video had been played by Microsoft's defence on Monday. It ostensibly showed how modifications made to Windows 98 by Edward Felten's IE uninstall program caused severe performance degradation. But the video has given prosecution lawyer David Boies a courtroom scene he can dine out on for the rest of his life. Boies went through the video, freeze-framed it and showed that a title bar had suddenly changed in the middle of the 'demonstration.' It had been edited, and the edit had clearly used two versions of Windows, one of which had not been subject to Felten's modifications. Boies hereby wins our newly-created Register Perry Mason of the Year Award, and should reward his unsung researcher handsomely. There is no question that someone, somehow, had cooked the video at Microsoft.
Here's the DOJ's Complaint in that antitrust litigation, US vs. Microsoft Corp., which included this allegation:
5. To protect its valuable Windows monopoly against such potential competitive threats, and to extend its operating system monopoly into other software markets, Microsoft has engaged in a series of anticompetitive activities. Microsoft's conduct includes agreements tying other Microsoft software products to Microsoft's Windows operating system; exclusionary agreements precluding companies from distributing, promoting, buying, or using products of Microsoft's software competitors or potential competitors; and exclusionary agreements restricting the right companies to provide services or resources to Microsoft's software competitors or potential competitors....

15. Having failed simply to stop competition by agreement, Microsoft set about to exclude Netscape and other browser rivals from access to the distribution, promotion, and resources they needed to offer their browser products to OEMs and PC users pervasively enough to facilitate the widespread distribution of Java or to facilitate their browsers becoming an attractive programming platform in their own right.

16. First, Microsoft invested hundreds of millions of dollars to develop, test, and promote Internet Explorer, a product which it distributes without separate charge. As Paul Maritz, Microsoft's Group Vice President in charge of the Platforms Group, was quoted in the New York Times as telling industry executives: "We are going to cut off their air supply. Everything they're selling, we're going to give away for free." As reported in the Financial Times, Microsoft CEO Bill Gates likewise warned Netscape (and other potential Microsoft challengers) in June 1996: "Our business model works even if all Internet software is free. . . . We are still selling operating systems. What does Netscape's business model look like? Not very good."

17. But Mr. Gates did not stop at free distribution. Rather, Microsoft purposefully set out to do whatever it took to make sure significant market participants distributed and used Internet Explorer instead of Netscape's browser -- including paying some customers to take IE and using its unique control over Windows to induce others to do so. For example, in seeking the support of Intuit, a significant application software developer, Mr. Gates was blunt, as he reported in a July 1996 internal e-mail:

I was quite frank with him [Scott Cook, CEO of Intuit] that if he had a favor we could do for him that would cost us something like $1M to do that in return for switching browsers in the next few months I would be open to doing that. (MS6 6007642).
18. Second, Microsoft unlawfully required PC manufacturers, as a condition of obtaining licenses for the Windows 95 operating system, to agree to license, preinstall, and distribute Internet Explorer on every Windows PC such manufacturers shipped. By virtue of the monopoly position Windows enjoys, it was a commercial necessity for OEMs to preinstall Windows 95 -- and, as a result of Microsoft's illegal tie-in, Internet Explorer -- on virtually all of the PCs they sold. Microsoft thereby unlawfully tied its Internet Explorer software to the Windows 95 version of its monopoly operating system and unlawfully leveraged its operating system monopoly to require PC manufacturers to license and distribute Internet Explorer on every PC those OEMs shipped with Windows.

19. Third, Microsoft intends now unlawfully to tie its Internet browser software to its new Windows 98 operating system, the successor to Windows 95. Microsoft has made clear that, unless restrained, it will continue to misuse its operating system monopoly to artificially exclude browser competition and deprive customers of a free choice between browsers.

20. Microsoft designed Windows 98 so that removal of Internet Explorer by OEMs or end users is operationally more difficult than it was in Windows 95. Although it is nevertheless technically feasible and practicable to remove Microsoft's Internet browser software from Windows 98 and to substitute other Internet browser software, OEMs are prevented from doing so by Microsoft's contractual tie-in.

The historical documents are helpful in providing context to the reactions to Microsoft's announcement, and you may understand why some are so skeptical as to the sufficiency of Microsoft's self-remedy of an OEM-based solution. For example, note what U.S. District Judge Thomas Penfield Jackson wrote in his 1999 Findings of Fact in United States v. Microsoft:
54. OEMs are the most important direct customers for operating systems for Intel-compatible PCs. Because competition among OEMs is intense, they pay particularly close attention to consumer demand. OEMs are thus not only important customers in their own right, they are also surrogates for consumers in identifying reasonably-available commercial alternatives to Windows. Without significant exception, all OEMs pre-install Windows on the vast majority of PCs that they sell, and they uniformly are of a mind that there exists no commercially viable alternative to which they could switch in response to a substantial and sustained price increase or its equivalent by Microsoft. For example, in 1995, at a time when IBM still placed hope in OS/2's ability to rival Windows, the firm nevertheless calculated that its PC company would lose between seventy and ninety percent of its sales volume if failed to load Windows 95 on its PCs. Although a few OEMs have announced their intention to pre-install Linux on some of the computers they ship, none of them plan to install Linux in lieu of Windows on any appreciable number of PC (as opposed to server) systems. For its part, Be is not even attempting to persuade OEMs to install the BeOS on PCs to the exclusion of Windows.

55. OEMs believe that the likelihood of a viable alternative to Windows emerging any time in the next few years is too low to constrain Microsoft from raising prices or imposing other burdens on customers and users. The accuracy of this belief is highlighted by the fact that the other vendors of Intel-compatible PC operating systems do not view their own offerings as viable alternatives to Windows. Microsoft knows that OEMs have no choice but to load Windows, both because it has a good understanding of the market in which it operates and because OEMs have told Microsoft as much. Indicative of Microsoft's assessment of the situation is the fact that, in a 1996 presentation to the firm's executive committee, the Microsoft executive in charge of OEM licensing reported that piracy continued to be the main competition to the company's operating system products. Secure in this knowledge, Microsoft did not consider the prices of other Intel-compatible PC operating systems when it set the price of Windows 98.

I'm finding all these historical gems on Groklaw's Microsoft Litigation page, and you can too.

What I'd Like:

As for a remedy, here's my input: have scripts that connect to dedicated servers, yes, so users can choose whatever browser they want. Or browsers, but don't preload, or Microsoft might include dated code that doesn't work as well as more modern versions. FOSS in particular revises often and improves quickly, so it would be a mistake, I think, to include code that relies on Microsoft to choose which version. Think ODF.

But I'd like links to descriptions of the browsers too, so users who never heard of Chrome, for example, or Opera, or Firefox, or Safari can learn what the various browsers are like, what they offer, what you can do with them, because IE users aren't used to choice, and they probably don't know how many, many options they actually have in a browser like Opera or the FOSS browsers. Here's the Opera page that describes all the many choices you have in that amazing browser. They tend to be first with innovations, as far as I'm concerned. And there should at least be screenshots that show what they look like, again via links, so the browsers control how they present, not Microsoft.

Update: Here's the EU Commission statement in full:

*******************************************

Antitrust: Commission statement on Microsoft Internet Explorer announcement Reference: MEMO/09/272 Date: 12/06/2009

MEMO/09/272

Brussels, 12 th June 2009

Antitrust: Commission statement on Microsoft Internet Explorer announcement

The European Commission notes with interest Microsoft's announcement of its plans for Windows 7, and in particular of the apparent separation of Internet Explorer (IE) from Windows in the EEA. The Commission will shortly decide in the pending browser tying antitrust case whether or not Microsoft’s conduct from 1996 to date has been abusive and, if so, what remedy would be necessary to create genuine consumer choice and address the anticompetitive effects of Microsoft’s long-standing conduct. In terms of potential remedies if the Commission were to find that Microsoft had committed an abuse, the Commission has suggested that consumers should be offered a choice of browser, not that Windows should be supplied without a browser at all.

At the level of both computer manufacturers and retail sales, the Commission's Statement of Objections (SO) suggested that consumers should be provided with a genuine choice of browsers. Given that over 95% of consumers acquire Windows pre-installed on a PC, it is particularly important to ensure consumer choice through the computer manufacturer channel.

As for retail sales, which amount to less than 5% of total sales, the Commission had suggested to Microsoft that consumers be provided with a choice of web browsers. Instead Microsoft has apparently decided to supply retail consumers with a version of Windows without a web browser at all. Rather than more choice, Microsoft seems to have chosen to provide less.

As for sales to computer manufacturers, Microsoft's proposal may potentially be more positive. It is noted that computer manufacturers would appear to be able to choose to install Internet Explorer – which Microsoft will supply free of charge - another browser or multiple browsers. Were the Commission to conclude that Microsoft’s behaviour has been abusive, it would have to consider whether this proposal would in itself be sufficient to create genuine consumer choice on the web browser market. The Commission would inter alia take into account the long standing nature of Microsoft's conduct. It would also have to consider whether this initial step of technical separation of IE from Windows could be negated by other actions by Microsoft.

Consumer Choice and Innovation

The development of new online services makes web browsers an increasingly important tool for businesses and consumers, and a lack of real consumer choice on this market would undermine innovation.

The Commission’s preliminary concerns are set out in detail in a Statement of Objections sent to Microsoft in January. The specific circumstances of Microsoft’s tying of IE to Windows in this case would appear to lead to significant consumer harm.

The SO sets out the preliminary view that, should the Commission conclude that Microsoft’s conduct was abusive, any remedy would need to restore a level-playing field and enable genuine consumer choice between Internet Explorer and third-party web browsers, in order to bring the infringement effectively to an end. A potential remedy to these concerns, which the Commission considered in the SO and which would not require Microsoft to provide Windows to end-users without a browser, would be to allow consumers to choose from different web browsers presented to them through a 'ballot screen' in Windows.

Background

The Commission sent a Statement of Objections (SO) to Microsoft on 15 January 2009 (see MEMO/09/15 ).

A Statement of Objections is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of a Statement of Objections can reply in writing to the Statement of Objections, setting out all facts known to it which are relevant to its defence against the objections raised by the Commission.

Microsoft replied to the SO on 28 April 2009. The Commission is currently considering Microsoft’s reply, and additional evidence in the case, and has not yet reached any conclusion.

The Commission's assessment would be guided in particular by the principles laid down by the Court of First Instance in its judgment of September 2007 in the Microsoft case regarding the tying of Windows Media Player (see MEMO/07/359 ) and the Commission's experience with the remedy in that case, while taking account of the specific circumstances of the present case.


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