European Commission considers probe into Microsoft's role in mobile phone market

The European Commission is considering a new antitrust case against Microsoft, based on allegations that the software giant is...

The European Commission is considering a new antitrust case against Microsoft, based on allegations that the software giant is trying to extend its dominance of PC operating systems into the market for mobile phone software.

Commission spokeswoman Amelia Torres claimed she was unaware of any complaints from mobile phone companies. She also declined to comment on the possibility that the European Commission might open a new investigation on its own initiative.

A senior adviser to the European Commission admitted that there were concerns that Microsoft might take over the market for mobile phone software. "Mobile phones are a very important market in Europe. The commission is worried that Microsoft might take advantage of the strength of Windows in order to dominate in mobile phones," he said.

"Microsoft wants to commoditise mobile phones as it has done with computers," said a lawyer representing one of the main mobile phone makers in Europe, who requested anonymity.

Microsoft also threatens mobile phone operators as well as manufacturers, he added. "If Microsoft's .net initiative is to be a success it needs mobile phones to play by Microsoft's standards. Mobile phone operators could have a problem with that," he said, adding that if Microsoft failed to establish itself in mobile phones "this would leave a big hole in its .net strategy".

The .net initiative attempts to link Internet users to the Microsoft system by giving them a "passport" that authenticates their identity and allows them access to Microsoft Web sites for e-mail and online games, and e-commerce sites that conform to the .net idea.

Nokia, the mobile phone manufacturer with the most to lose from a Microsoft assault on its market, has not yet complained to the European Commission, according to one of its lawyers in Brussels. "There is huge scope for conflict," he said, asking not to be named.

When mobile phones become Internet-compatible, the phone operators want to become the Internet gatekeepers for their customers. The .net initiative would undermine their role in the relationship with those customers, the lawyer said.

A report in the Wall Street Journal last week suggested that European companies have already complained to the commission about Microsoft's move into the mobile phone software market. The companies contended that Microsoft is bundling Titanium, its corporate e-mail software, with code that ensured servers have better connections to Windows-based wireless devices than to competitors' devices, the article claimed.

This, they argued, could create bottlenecks between corporate e-mail servers and wireless handsets running non-Windows software.

Earlier this month, Orange launched the Orange SPV based on Window's software in the UK. However, last week the company was rejected by UK phone maker Sendo, which decided to power its phones using Nokia software. Microsoft has a minority stake in Sendo.

Any new probe into Microsoft is unlikely to begin until the existing case is closed. People close to the commission said it is highly unlikely that the latest concerns about mobile phones would be added to the existing case, as this would delay that ruling.

The existing case against Microsoft comprises two separate investigations. The first was sparked by a complaint about Microsoft's abuse of its Windows operating system monopoly by rival software maker Sun Microsystems. The second part, focused specifically on Windows 2000, was initiated by the commission.

Microsoft is also fighting accusations that it may have violated antitrust rules by using illegal practices to extend its dominant position in the market for personal computer operating systems into the market for low-end server operating systems.

It is also accused of bundling some so-called middleware functions, such as its Media Player software, into Windows 2000.

The commission has said it expects to issue a preliminary ruling by the end of this year, with a final verdict due early next year.

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