The European Commission is looking into contracts that Microsoft has signed with 23 Internet service Providers (ISPs)in case they breach competition laws.
This probe is separate from the antitrust investigations by the US Department of Justice, which focuses on the bundling of Microsoft's browser with its operating systems, but DoJ officials were informed about the DG4 investigations during a meeting in Brussels on Tuesday, the 'VNU Newswire' has learnt.
European Commissioner Karel Van Miert?s spokesman, Willy Hilin, refused to discuss any details about the investigation. However, he says the European Commission?s directorate general for competition (commonly known as the DG4) is investigating whether the contracts between Microsoft and ISPs might lead to "market foreclosure". These investigations will be concluded within the next few weeks, Hilin said.
Microsoft's contracts with ISPs contain a non-disclosure agreement, which forbids the services providers from discussing their content.
However, it is rumoured that Microsoft is pressurizing ISPs heavily to promote Internet Explorer to the detriment of the competing Netscape Communicator browser. For instance, Microsoft is said to have asked some ISPs not to offer a ?Netscape Now? button on their home pages. This button leads to a download area for Netscape?s Communicator browser, and is a feature of many Web sites.
John Frank, Microsoft's director of law and corporate affairs, refuses to say whether or not the removal of the Netscape button is a part of some contracts with ISPs.
If the Commission finds cause, the next stage will be to issue Microsoft with a so-called ?statement of objections?. This would force it to respond to the DG4?s complaint whithin about six weeks, said Hilin. This could eventually lead to a hearing, after which Microosft might be forced to change its contracts with ISPs.
But Frank played down the latest probe. "The Commission periodically, routinely asks companies about information about different business practices," he said - although he admitted to finding it "a little baffling" that the Commission has spoken publicly about this particular investigation. He said he is meeting with DG4 officals soon, but claims this meeting is about a completely different and far older dispute.
Frank claims Microsoft has two types of contract with ISPs. The first is where ISPs license the Internet Explorer (IE) browser to distribute to their customers. The second is a referral arrangement - the software ?wizard? that sets up IE 4 on a PC lists a number of ISPs in the area where the customer lives. Frank admitted the latter does involve the ISPs paying money to Microsoft, but would not discuss details.
He said he was convinced that Microsoft's contracts with ISPs contain no clauses that limit competition. "We do not have exclusive agreements with ISPs", he stated.
One important European ISP confirmed that it signed a licensing agreement for Internet Explorer in 1995, but says the agreement is not exclusive. The agreement requires it to promote IE as the ?best solution?, but still allows it to distribute another browser, our contact said. This ISP says its decision not to include a 'Netscape Now' button on its home page was not taken in response to pressure by Microsoft.
According to Hilin, the ISP contracts are only one of a number of antitrust investigations currently being conducted by the DG4. Another concerns Microsoft's controversial alliance with Apple this summer.
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